- On Monday, President Joe Biden introduced a new proposal for a minimum tax on billionaires.
- Unrealized capital gains — the value that assets like stocks accrue before they're sold — would be taxed.
- Inequality researcher Gabriel Zucman estimates the top 10 billionaires would owe at least $215 billion.
President Joe Biden wants to tax billionaires more.
On Monday, Biden introduced a new tax proposal targeting Americans with over $100 million as part of his 2023 budget request. The richest Americans would have to pay at least 20% in income tax under the Billionaire Minimum Income Tax.
The proposal also expands the tax code's definition of income. Traditionally, income taxes target the paycheck that the majority of workers bring home.
But that's not how most billionaires make their money. Their net worths are propelled by assets like bonds and stocks. When those assets are sold off, the increase in value between when they were bought and later sold are called capital gains, and taxed at a lower rate than a paycheck.
But most ultra-wealthy Americans hold onto their assets as they keep gaining value on paper, racking up massive fortunes without ever selling, making them what's called unrealized capital gains — which currently aren't subject to income taxes.
Under the White House plan, the minimum tax includes unrealized gains as part of income. So, if billionaires aren't paying a 20% tax on their full range of income, including any increases in the value of stocks and other assets they're holding on to, they'll owe the government more. The White House previously calculated that, including unrealized gains, America's 400 wealthiest families pay just 8.2% in annual income taxes.
That could mean a big tax bill for some of America's most prominent billionaires.
Leading inequality researcher Gabriel Zucman crunched the numbers on just how much members of America's three-comma club would owe. Using data from the Bloomberg billionaire index, Zucman estimates that the top 10 billionaires alone would owe at least $215 billion in the next decade.
Tesla CEO Elon Musk trashed a similar proposal last year. "Eventually, they run out of other people's money and then they come for you," Musk tweeted.
The Biden administration estimates that the tax could bring in $360 billion over the next decade, and says that half of the tax's revenue would come from households worth over $1 billion.
But whether or not the tax gains any political traction is a different question entirely. There was considerable unease among Democrats around another proposal specifically designed to hit billionaires with a new tax on their massive wealth last fall from Sen. Ron Wyden of Oregon.
Conservative Democrat Sen. Joe Manchin of West Virginia pummeled the Wyden plan as divisive last year. His office didn't respond to a request for comment on Biden's budget proposal.