Taxation of rich Individuals positive factors momentum as Biden and States push plans ahead

Several states are unveiling new tax proposals, adding to the efforts of the Biden administration and Senate Democrats to tax ultra-rich Americans and corporations.

California lawmakers are considering an extreme wealth tax that would include an annual excise tax of 1% for those with assets over $ 50 million per taxpayer and a 1.5% tax for those with assets over $ 1 billion. USD provides. The tax would raise an estimated $ 22.3 billion as of 2023. New York and Washington are also considering new taxes for the ultra-wealthy.

“This way we’re going back to California, where everyone has a chance, and I don’t know a single business leader or moderator who doesn’t believe in it,” Congregation member Lorena Gonzalez (D-San Diego) said during a press conference on Tuesday. “It’s time to do something about it and honestly quit.”

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At the national level, the Biden government and Democratic Legislature are implementing various tax measures related to higher taxes for wealthy Americans and businesses.

President Biden recently told Good Morning America that “anyone who earns more than $ 400,000 a year will see a small to significant tax increase” under the tax plan his administration is developing. “If we just reset the tax rate back to what it was when Bush was president – the top tax rate was 39.6% of federal taxes,” added Biden, “that would increase to $ 230 billion.”

Senator Elizabeth Warren (D-MA) recently reintroduced her proposal to tax the ultra-rich.

“I know Senator Warren introduced a wealth tax, and the president shares her view that middle-class families are paying more than their fair share and those at the top are not doing their part,” White House press secretary Jen Psaki told a news conference on Monday. “Surely he has this common goal.”

United States President Joe Biden speaks during an event with the CEOs of Johnson & Johnson and Merck in the South Court Auditorium of the Eisenhower Executive Office Building on March 10, 2021 in Washington, DC. (Photo by Alex Wong / Getty Images)

“Something we’ve never done in the US”

The story goes on

The proposed property taxes in California and Washington state are similar to Warren’s plan and would impose an annual tax rate on income above certain thresholds.

“Billionaires have amassed an additional $ 1.1 trillion in assets since the pandemic began,” said Congregation member Alex Lee (D-San Jose). “For California to really roar again, we need significant investment in our communities. We’re slapping a modest 1% tax on households over $ 50 million net worth and 1.5% on assets over $ 1 billion.” in front.”

Wealth tax critics say it can be difficult to calculate and enforce. The income generated may not be as high as expected, while the cost of administering the tax may be higher than calculated.

“Wealth taxation is something we have never done in the US and most countries have not,” Jared Walczak, vice president of government projects for the tax foundation, told Yahoo Money. “They are complex and cause great economic damage because they are paid for your wealth – which often has to be liquidated to pay for it.”

While wealth taxes peaked in OECD countries in the 1990s, the number of OECD countries currently levying wealth taxes fell to five from 12 by 2019 due to the challenges these taxes pose.

The proposed plan in New York, which includes increasing income taxes, introducing new capital gains taxes, and increasing inheritance taxes, is similar to President Joe Biden’s campaign plan to increase the corporate tax rate to 28% and require a true minimum tax of 21% all foreign income from U.S. corporations, raise the highest individual income tax rate to 39.6% (the current maximum is 37%) and impose the same capital income tax rate on those who earn more than $ 1 million a year as you do their wages.

The top 5% would bring in most of the tax revenue.  (Graphic: David Foster / Yahoo Finance)

The top 5% would bring in most of the tax revenue. (Graphic: David Foster / Yahoo Finance)

“We create more billionaires than anywhere in the world”

This isn’t the first time California has proposed a wealth tax for its richest residents: Last year, a similar bill to impose a 0.4% tax on the richest people with net worth more than $ 30 million went inadequate supported.

Instead, the new proposal increases the tax to 1% for people who earn more than $ 50 million a year.

“California has 12% of the US population but 25% of all billionaires,” said economist Emmanuel Saez, who worked with Warren on her property tax proposal, at the news conference on Tuesday. “Your total wealth is now about $ 1 trillion … about half of the $ 22 billion wealth tax would be paid by 170 California billionaires.”

Gonzalez noted, “We create more billionaires in California than anywhere in the world, but we still have people on the streets, we still have schools that are underfunded.”

Miguel Santiago, a Democrat representing Los Angeles, added, “When we talk about a property tax, we are talking about striking at the heart of income inequality … many people in our communities have fallen behind … [while] Those who are very rich could afford quarantine in their multi-million dollar homes or on their yachts. Lifting people out of poverty is not a radical idea. “

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Entrepreneur Joe Sanberg, a progressive activist who has also pushed for a $ 15 minimum wage, also joined in, saying he is passionate about the initiative as he sees it fueling economic growth in the state .

Washington wealth tax would only target intangible financial instruments, meaning investments and property in publicly traded companies would be taxed, but not homes or business property. Walczak noted that Washington state’s wealth tax would only affect 12 billionaires.

“If either of them left the state or made another state their state of residence, tax revenues on them would fall,” he said. “Not just the income from this new wealth tax, but possibly all other taxes as well.”

Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.

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