It was an incredible moment for many of the super-rich in America. Taxing the super-rich, once a left-wing fantasy, is once again swirling around Washington – and this time the plan originates in the White House.
“It’s dead on arrival, it’s unconstitutional, and it doesn’t make any sense,” billionaire Leon Cooperman said in an interview with The Daily Beast. “Why don’t they remove the damn loopholes in the tax code?”
The Biden administration was prepared to announce the proposal on Monday as part of its budget plan for 2023. It would affect a small percentage of the population — households worth $100 million or more. up — those who will face a minimum annual tax rate of 20 percent of their income, including appreciation of certain investments.
Under the current system, many billionaires can avoid paying meaningful taxes for years or even decades by holding liquid assets that are taxed only on sale. The average investor can defer taxes in a similar way, but the super-rich can finance their lifestyles by borrowing huge sums of money and using their stocks as collateral, helping they do not incur significant tax liabilities.
Many super-rich investors also take advantage of loopholes or charitable deductions to add to their obligations as they come due.
The report outlined each billionaire’s “true tax rate,” a controversial metric that measures the taxes they paid between 2014 and 2018 as a percentage of their wealth. Musk’s rate is relatively high 3.27%, while Bezos’ is only 0.98%.
Democrats have attacked the super-rich for years, claiming they haven’t paid their fair share. The new minimum tax proposal is an attempt to address that problem — or at least make noise to rally the party’s base.
Some billionaires are not happy to be caught. Grocery billionaire John Catsimatidis said: “I think it’s stupid to punish people who create jobs and make money. “I create jobs. I don’t make most of my money in hedge funds. I don’t make a lot of money in the stock market. I’m different.”
“It would lead to very unnatural actions in the economy,” added Cooperman, who said he favors a progressive tax system but favors doing so by closing other loopholes.
According to a graph Economist Gabriel Zucman shared on Twitter that Biden’s proposal could theoretically generate a $50 billion tax bill for Elon Musk, the largest of any in the country, followed by mean $35 billion deal for Jeff Bezos. In total, the ranking estimates, the top 10 billionaires will owe $215 billion between them.
Last fall Similar proposal gained some support in Congress before it was eventually scuttled. At the time, Catsimatidis told The Daily Beast that supporters of the plan were “just bullshit” and were “trying to change the way we live.”
“If they don’t like the US as it is, I’ll buy them a one-way ticket to Venezuela,” he said.
This time, the grocery billionaire said he’s stepping back. Many members of the Forbes 400 are Democrats and richer than he is, he said, and will owe more money if the policy somehow becomes law.
“Let them fight it,” he said. “Let the speculators kill each other.”