Biden’s new $1.75 trillion framework to be financed in part on new 5 percent ‘surtax’ on wealthy who bank more than $10 million a year
- The new surcharge would raise an estimated $230 million over a decade
- 5 percent rate hike on income of more than $10 million
- Hit with another 3 per cent over $25 million
- Comes after negotiators ditched plan to try to tax holdings of billionaires holding huge investments without trading them
- Other tax provisions would establish 15 pct corporate minimum tax, boost enforcement
- White House outlined an estimated $2 trillion in revenue proposals
- Biden’s hike in capital gains, top individual rate, and corporate rate hike got ditched
The Build Back Better ‘framework’ released by the White House Thursday includes a new ‘surtax’ on earnings by millionaires that would raise an estimated $230 million over a decade.
The tax revenue raiser was a last-ditch addition to find funds for the overall $1.75 trillion package – after another last-minute idea, a ‘billionaires tax’ that went after investments held but not yet sold, was jettisoned.
The White House is selling the idea as a ‘a new surtax on the income of multi-millionaires and billionaires,’ who it notes make up the top 0.02 per cent of the population.
The 5 per cent surcharge goes on income over $10 million, with an extra 3 per cent surcharge on income of more than $25 million.
President Joe Biden’s new framework would raise nearly $2 trillion, including through a new surcharge on income of more than $10 million
The plan says it also will close a ‘loophole’ that lets wealthy taxpayers avoid paying the 3.8 per cent Medicare tax on earnings.
The surtax came into the picture after Biden and several key Democratic senators came out publicly for the billionaires tax – only to have West Virginia Sen. Joe Manchin throw cold water on it.
Dropped from the plan altogether are some of Biden’s top revenue proposals: an increase in the top corporate tax rate, an increase in the top individual tax rate, and a tax hike on capital gains.
Although the corporate rate hike is out, the plan does slap a 15 per cent minimum tax on corporate profits for corporations with over $1 billion in profits, based on shareholder reporting. It would raise an estimated $325 billion over a decade.
‘This means that if a large corporation says it’s profitable, then it can’t avoid paying its tax bill,’ according to a White House summary.
It also includes a 1 per cent surcharge on corporate stock buybacks – which executives and board members are able to support to ‘enrich themselves rather than investing [in] workers and growing the economy,’ as the White House put it. That provision would bring in an estimated $125 billion.
Another proposal would put a 15 per cent minimum tax on profits that U.S. corporations earn overseas, in keeping with a multinational agreement on a 15 per cent global minimum tax. It would bring in $325 billion, according to the White House.
For any of the hikes to happen, House and Senate negotiators must agree on final legislative language that passes through each chamber and gets signed by the president.
The White House is also claiming $400 billion in savings from boosted IRS enforcement – which it says will target the rich.
‘The President’s plan will accomplish this through transformation investments in the IRS: hiring enforcement agents who are trained to pursue wealthy evaders, overhauling technology from the 1960s, and investing in taxpayer service, so ordinary Americans can get their questions answered. Additional enforcement resources will be focused on pursuing those with the highest incomes; not Americans with income less than $400,000,’ it says.