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According to Biden (or his handlers), billionaires only pay 3% in taxes, so they need to pony up their fair share to help all of us peons.
Look, I think you should be able to be a billionaire if you can earn it, but just pay your fair share.
— President Biden (@POTUS) March 18, 2023
I think you ought to pay a minimum tax of 25%.
It’s about basic fairness. pic.twitter.com/oHgreYCdUz
Between the community notes response that got slapped on the tweet, the replies, and the quote tweets, the ratio is quite something!
I must say, Biden’s been blathering about how unfair it is that billionaires don’t pay their fair share for years.
But it is unclear where the 3% figure came from, and it contradicts figures the White House has issued in the past.
In February, the White House issued a fact sheet called “The Biden Economic Plan Is Working,” which calculated how much tax the U.S. could collect if it counted unrealized gains – a potential profit on an unsold asset – as income.
“In a typical year, billionaires pay an average tax rate of just 8%,” the fact sheet read. Factoring in unrealized gains is the reason for the lower statistic.
“Using the existing definition of taxable income, really rich people pay an average federal income tax rate in the mid-20s,” Brookings Institution Tax Policy Center senior fellow Howard Gleckman told PolitiFact in July. “If you want to include unrealized gains in your denominator, as the White House does, the average rate would go way down.”
Yes, the White House wants to include unrealized gains. What are unrealized gains?
An unrealized gain is a theoretical profit that exists on paper, resulting from an investment that has not yet been sold for cash.
Unrealized gains are recorded on financial statements differently depending on the type of security, whether they are held-for-trading, held-to-maturity, or available-for-sale.
Gains do not affect taxes until the investment is sold and the gain is realized.
If an investment is held for longer than a year, the profit is taxed at the capital gains tax rate.
In other words, if you purchase stock to augment your investment portfolio, or just decide to invest in stocks and hope the value of that stock grows, Biden wants to tax billionaires and YOU on the increase in value, EVEN IF YOU DON’T SELL. Yes indeed, taxing unrealized gains is how he wants billionaires to pay their fare share, except that it will also have a negative impact upon anyone who invests in stocks. Which also means that Joe’s own portfolio should be taxed on any unrealized gains he’s holding on to. I mean, it’s only fair that HE pays up as well. Right?
Needless to say, not only is taxing unrealized gains a big problem, Joe’s math is way off. Go figure.
However, even this 8% figure needs important context.
As we have previously noted, the White House’s 8% figure came from a report by its own Council of Economic Advisers that looked at what would happen if the United States were to tax unrealized gains on stocks. Currently, if people see their stock shares rise in value over time, those gains are not taxed until the shares are sold. If the shares are never sold, they aren’t taxed.
~Snip
So, what is the actual tax burden under the current tax code for the wealthiest Americans? IRS data from 2019 shows that the top 1% of taxpayers paid an average federal income tax rate of 25.6%. A more elite group, the top 0.001% — which in 2019 meant people earning about $60 million or more a year — paid 22.9%.
There is one study that pinpointed a roughly 3% tax rate for the ultrarich, but that, too, was based on a theoretical model in which unrealized wealth was taxed.
Oh, of course. Biden is touting THEORY as fact in this case, as he’s been doing for weeks and months now.
Well, more than a few folks are having none of it, hence the Tweet fact check on his billionaire tax scheme.
I certainly agree that everyone should pay taxes and not engage in elaborate tax-avoidance schemes.
— Elon Musk (@elonmusk) March 18, 2023
Would be curious to hear how these other “billionaires” are so good at avoiding taxes!
We should get rid of GRATs, but maybe other things too.
Some excellent questions for sure! Literally everything Biden has proposed, including the Inflation Reduction Act, has only increased inflation and had a negative impact on everyone’s pocket books. Yet here is Biden pushing again of the umpteenth time, taxes on billionaires. I’m sure he’s hoping we’ll ignore what’s in his bank accounts.
What’s good for the goose… Wonder how much in unrealized gains the Biden family has received via China? That would be quite the hit to their pocketbook now wouldn’t it?
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Featured Image: Taxes by DonkeyHotey. Creative Commons 2.0 license.
Stephen C says: Tax the Rich is a trope so yesterday, so looking backward, so stale, everyone knows it’s a crock, everyone. Vote for Joe in 2024? Well I need a vision to embrace. Taxing the rich and hating on white people is a been there done that. A man who had the clarity and the ability to create the most successful crime syndicate in American history, can shirley devise a plan to make me rich too. I am waiting.
370H55V I/me/mine says: This idea was first proposed by idiot Sen. Ron Wyden of Oregon, who unfortunately, is chairman of the Senate Finance Committee.
In making his case for taxing unrealized gains, he compared a nurse who gets tax withheld from her paycheck every two weeks with a multi-millionaire corporate executive whose investments are untaxed. His son, Adam, a self-made investment tycoon himself, must be totally embarrassed by his father’s stupidity.
The fact is that Wyden is comparing capital income to labor income. The executive also has tax (probably a lot0 withheld from his paycheck every two weeks, while I wonder what the nurse would say when she’s told to pay unrealized cap gains tax on her $150,000 stock inheritance from her parents.
Cameron says: I like the notion of a flat tax, payable only to the state you are a resident of. And out of the money the state takes in, the only part they pay to the feds is what is specifically covered in Article One, Section Eight of the Constitution.
Phil Snyder says: I proposed that we change to a per-capita tax on the states – where the population for the state is determined by the census – both for taxation and congressional apportionment purposes. Then we let each state determine how to raise the revenue. Along with this, we return to the states the ability to appoint or elect (either from the legislatures or from the citizens of that state) their Senators.
We should also add an amendment that states it requires a 2/3 majority of both houses to spend more than federal revenue.
WTP says: It’s not about the taxing, it’s about the spending. Move the rules around and so long as people are paying some degree of attention, everyone responds accordingly, and the tax producers (like billionaires…supposedly…and corporations) pay gets passed along through higher costs, fees, lost opportunities (jobs), etc. The constant shifting is a big part of the problem. A simpler, flatter tax has its advantages/appeal but is highly unlikely to be set and then left alone. The mucking with tax code is how we got here in the first place. Tax policy is overwhelmingly a distraction from the real problem, the spending.
WTP says: This went on in Florida for years. I was taxed on “market value” at the end of each year for any “excess” over $100K, outside of IRA, 401k, etc. Which means specific to the few hundred shares of Enron stock, which made up the amount that put me over that $100K threshold, I paid a tax rate of infinity.
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