Could the super-rich be the solution to the US budget?

Some well-known names in the general public are among Americans who would fall within a new tax bracket proposed by President Joe Biden.

The project aims to retain more of the cash generated by stock market rallies in recent years.

The tax would rise for a very small number of people — just over 20,000 US taxpayers with fortunes in excess of $100 million.

Investor Warren Buffett, Tesla boss Elon Musk and Amazon founder Jeff Bezos were among those affected.

Under the proposal, America’s richest 0.01% would pay a minimum tax of 20% on their income.

The main change is in the income calculation rules. Equity gains would be taxed even if the shares were not sold by the investor who will be taxed.

“This approach means that the wealthiest Americans pay taxes according to what they earn, like everyone else, and eliminates ineffective income protection that lasts decades or generations,” the White House said.

Obstacles

It’s the latest effort in a long list of attempts to raise taxes on the super-rich. It faces major obstacles in Washington — not to mention the very millionaires who would be hit by the measure.

There are 20,600 people worth more than $100 million in the US, according to estimates by the Boston Consulting Group.

According to the White House, more than half of the estimated $360 billion in revenue over a 10-year period, if approved, would come from the roughly 700 billionaires residing in the US.

“One hour they run out of other people’s money and then they come after you,” Tesla boss and richest man in the world, Elon Musk, tweeted last year. He commented on a proposed taxation along the same lines as the current one.

Under Biden’s proposal, Musk — a father of seven and with earnings of more than $280 billion — would have to pay $50 billion more in taxes over 10 years, according to analysis by Gabriel Zucman, an economist at the University of California, California. , in Berkeley.

Under the same calculation, Amazon founder Jeff Bezos would have to shell out $35 billion and mega-investor Warren Buffett another $26 billion.

“It’s no small feat,” tweeted Professor Zucman, who has studied the wealth of billionaires and helped craft a wealth tax proposal for the campaign of Senator Elizabeth Warren, who is on the far left side of the Democratic Party.

Biden’s proposal also calls for an increase in the income tax rate on families earning more than $400,000 — it would rise from a rate of 37% to 39.6%.

And the corporate tax would be raised to 28%, partially reversing cuts made under the Trump administration.

Biden would also promote other reforms to the system to tax gains in the value of stocks and property, which would apply not just to the wealthiest Americans.

Altogether, the changes would help reduce the deficit by $1 trillion over the next decade, according to the White House.

For 2022, the annual deficit is projected to be more than $1.2 trillion. Total debt exceeded $30 trillion last month.

Biden has long called for fiscal changes that would impact this year’s budget, but to no avail.

In Congress, other proposals to raise taxes on the wealthy have met with little success.

Democratic Senator Joe Manchin — a key member of Biden’s party who has put obstacles in the way of a broader proposal — said last year that a similar proposal, made by colleague Ron Wyden, was too complicated and affected very different people.

Other Democrats expressed concern about the viability of other bills put forward and the possibility of legal challenges arising.

US Treasury officials said on Monday that the goal was to push forward the debate in Washington about how to get the country’s richest taxed more fairly.

The 400 richest families in the United States have more money than all 10 million families in the country’s black population, according to a 2020 analysis by the Brookings Institution, a Washington-based think tank.