Biden’s tax idea
PremiumThe idea gels well with the fact that America’s 700-plus billionaires made estimated wealth gains of $1 trillion in 2021 alone. The $361 billion this levy could raise over the next decade can be put to good use, too
The US budget unveiled this week had an outlay of $5.8 trillion, a big chunk of it marked to build America “back better". But its novelty lay in its billionaire minimum income tax proposal for taxing households worth over $100 million by assets. Those held liable but pay a tax rate below 20% of their income and unrealized gains must pony up more money to reach that mark. This way, as US President Joe Biden argued, the wealthy will no longer get away with an “indefensibly low" tax burden. The idea gels well with the fact that America’s 700-plus billionaires made estimated wealth gains of $1 trillion in 2021 alone. The $361 billion this levy could raise over the next decade can be put to good use, too.
Other fiscally-overstretched regimes tempted to follow suit with a Piketty-style wealth tax, however, should pause to ponder what taxing “unrealized gains" would imply. In India, a charge on capital appreciation could dissuade a much-needed shift away from holdings that are hard to value fairly, like real estate, or can be obscured, like gold and crypto, towards openly held assets that underpin real income-generators. Not only would it be prone to litigation, it may also prove distortive.
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