Topline
Sen. Joe Manchin (D-W.V.) said Tuesday he would not support President Joe Biden’s proposed “minimum tax on billionaires,” which would impose a 20% minimum tax on households worth over $100 million and would target unrealized gains, the second time in five months Manchin has opposed the administration’s efforts to realize a dramatic targeted tax increase on the richest Americans.
Key Facts
Manchin said taxes should be applied to earned income, not to unrealized gains—such as “on paper only” income like stocks and bonds that have gained value since their purchase—but suggested the tax code should be reformed to be made fairer in other ways, remarking that “everybody has to pay their fair share,” The Hill staff writer Alex Bolton said in a tweet.
While Biden said the new tax would affect only the wealthiest 0.01% of Americans, Manchin said he thought “everyone should pay,” Bloomberg reported.
Manchin’s comments echoed his opposition in October to a similar scheme to impose a long-term capital gains tax on the unrealized profits of taxpayers making over $100,000 in gross annual income—a measure that was discarded by Democratic legislators after Manchin said he was against it.
In an evenly divided Senate, Manchin’s opposition to the proposed new billionaire tax may prompt the White House to abandon it, or leave the measure in purgatory like the Democrats’ enhanced child tax credit, which expired in December after Manchin refused to support it due to its hefty price tag and alleged risk of increasing inflation.
Key Background
Presently, individuals only pay taxes on the gains of assets like stocks and real estate when those assets are sold. Biden’s new billionaire tax, included in the proposed fiscal year 2023 budget, would reverse this exemption for assets with unrealized gains—a move that would reduce the federal deficit by around $360 billion in 10 years, the White House claimed. The tax would not take full effect immediately, instead allowing affected households to make top-up payments on current unrealized income over nine years, followed by top-up payments on new unrealized income every five years. While White House messaging on the proposed tax has emphasized that Biden is a capitalist and believes that anyone should be able to become a billionaire, Manchin has worried that such measures punish the U.S.’s most successful earners. The proposed budget would also raise the corporate tax rate to 28% and include measures intended to prevent corporations from using international tax havens.
Big Number
724. That’s how many billionaires there are in the U.S.
Further Reading
“Billionaire Tax Dead On Arrival After Manchin Blasts Proposal Mere Hours After Its Release” (Forbes)