The virtual tax-free status of billionaire wealth growth was highlighted last month by a report from ProPublica. It revealed that 25 top billionaires paid on average only a tiny share (3.4 percent) of their wealth-growth income in federal taxes and that several, including Jeff Bezos (as of July 9 worth $212 billion) and Elon Musk (around $163 billion), went multiple recent years paying zero federal income.
Because of gaping loopholes in the tax code, increased wealth like that enjoyed by America’s billionaires and the richest 1% can go untaxed forever and even when it is taxed the rate is about half that of wage income. President Biden would end those special breaks for millionaires and billionaires as part of his plan to tax wealth and not just work.
Among Biden tax reforms that would tap some of this billionaire wealth growth are:
Raising the corporate tax rate to 28 percent (Revenue raised over 10 years: $858 billion) Corporate taxes are largely paid by the owners of corporations, which means the stockholders in the companies. Billionaires are among the wealthiest 1% that own over half of all corporate stock.
Curbing offshore corporate tax dodging ($1 trillion) Biden would raise by half the U.S. corporate tax on the foreign profits of American firms and make it harder for corporations to game the system with phony headquarters’ shifts and accounting that exploits offshore tax havens.
Reforming the taxation of capital gains ($324 billion) Growth in wealth such as billionaires have experienced is a kind of income known as “capital gains.” That kind of income currently enjoys special tax treatment, including a nearly half-off top tax rate and the possible avoidance of all tax on a lifetime’s worth of gains. For those making over $1 million a year (which very likely includes all billionaires), Biden would end the tax-rate discount and require lifetime gains be taxed before the underlying assets are passed to the next generation.
Americans wholeheartedly support Biden’s proposed tax reforms. A poll from June from ALG Research and Hart Research found that two-thirds of the public endorse higher taxes on the wealthy and corporations; respondents believed by over a two-to-one margin that higher taxes on the rich and big firms would help the economy; and by a seven-to-one ratio, poll participants preferred paying for Biden’s proposed investments through such tax reforms rather than adding the cost to the national debt.
A more direct way to tax billionaire wealth is to tax the wealth itself instead of just its growth. If the wealth tax proposed by Sen. Elizabeth Warren had been in effect in 2020, billionaires alone would have paid $114 billion for that year — and would pay an estimated combined total of $1.4 trillion over 10 years.
March 18, 2020 is used as the unofficial beginning of the coronavirus crisis because by then most federal and state economic restrictions responding to the virus were in place. March 18 was also the date that Forbes picked to measure billionaire wealth for the 2020 edition of its annual billionaires’ report, which provided a baseline that ATF and IPS compare periodically with real-time data from the Forbes website. PolitiFact has favorably reviewed this methodology.
March 18, 2020 data: Forbes, Forbes Publishes 34th Annual List Of Global Billionaires” March 18, 2019 July 9, 2021 data: Forbes, “The World’s Real-Time Billionaies, Today’s Winners and Losers,” accessed July 9, 2021.