In announcing a proposal for one of the largest military budgets in history, of US$ 813 billion (R$ 3.9 trillion), the President of the United States, Joe Biden, presented to Congress a motion for the country to start taxing the so-called super -rich — which would include billionaires like Jeff Bezos (Amazon) and Mark Zuckerberg (Meta/Facebook).
The proposal fulfills one of the Democrat’s campaign promises and, if approved, will bolster cash to boost the Defense Department’s exclusive budget by more than 4% in fiscal year 2023, which begins Oct.
It also aims to reduce income inequality in the US, which has been steadily rising for 50 years, and sets a precedent for other countries to try something similar – something that has been discussed for years in Europe.
Over the past 50 years, while the wealthiest people’s income appropriation has skyrocketed among Americans, the poorest half have seen their share fall from 20.2% of the total in 1970 to just over 13% last year, according to data from the World Inequality Database, platform of the Paris School of Economics under the supervision of economist Thomas Piketty.
In the proposal, the Democrat asks Congress to create a minimum tax rate of 20% on the income of families with assets greater than US$ 100 million (R$ 480 million).
Those with wealth greater than that, and who do not pay at least 20% in taxes on the combination of their reported income and gains on assets such as stocks, must pay additional fees until they reach the new 20% threshold.
Taxation must occur even if the individual who holds shares in appreciation does not dispose of them. Today, capital gains are taxed only when realized (as in the sale of securities) and are taxed less than labor income, for example.
Last year, information released by the website ProPublica caused controversy in the US, claiming that Warren Buffett, from the Berkshire Hathaway fund and one of the richest men in the world, paid the equivalent of just 0.1% tax on the growth of his wealth. for four years — while the average American pays an average of 14%.
Although his fortune increased by US$ 24 billion in the period, Buffett declared US$ 125 million in income – as his main investment strategy is the so-called “buy and hold” (buying and holding shares for long periods). According to the same survey and for the same reasons, Bezos paid the equivalent of 1% in taxes; and Tesla’s Elon Musk, 3.3%.
The White House estimates that the new tax could reduce the US fiscal deficit by about $360 billion within a decade.
The budget proposal also calls for raising the maximum individual income tax rate from 37% to 39.6% — and from 21% to 28% on corporate earnings.
“I’m asking for one of the largest investments in our national security in history, with the funds necessary to ensure that our Armed Forces remain the best prepared, trained and equipped in the world,” Biden said in presenting the proposal.
The Democrat has tight control of the House votes and splits the Senate votes 50-50 with Republicans, making it challenging to pass the proposal to tax the super-rich.
But experts see this issue as quite mature and with the support of many of the individuals who would eventually be caught up in the new taxation.
In January, more than 100 millionaires and billionaires around the world, most of them from the US, asked for their riches to be taxed higher during a virtual meeting of the World Economic Forum.
The signatories — including Disney heiress Abigail Disney and Morris Pearl, former director of the BlackRock fund — called on political and business leaders to make them pay their share in the global economic recovery after the pandemic crisis.
Overall, Biden’s budget proposal for the next fiscal year amounts to US$5.8 trillion (R$ 27.8 trillion) and predicts, with the end of most of the relief measures in the pandemic, a drop of almost 50% in the deficit, to US$ 1.4 trillion (5.8% as a proportion of GDP). In this scenario, US public debt would be reduced slightly to 102% of GDP.
The White House also projects that inflation would fall from 7.9% to 4.7% by the end of this year, before falling to 2.3% in 2023.
