President Joe Biden has discussed a proposal that would target billionaires in his 2023 budget. The proposal calls for a new minimum tax, forwardly named the “Billionaire Minimum Income Tax.”
What exactly is the Billionaire Minimum Income Tax?
This tax would assess a 20% minimum tax rate on US households worth more than $100 million. However, over half the revenue would likely come from households bringing in more than $1 billion of income.
The proposal document states, “This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters.”
Wealthy households that already pay 20% on their full income won’t pay any additional tax under the Billionaire Income Tax proposal. However, if they pay less than 20%, they will be expected to meet the new minimum.
What will the Billionaire Minimum Income Tax accomplish?
The proposal was created as part of Biden’s new spending plan, which is expected to reduce the deficit by $1.3 trillion over the next ten years. About $360 billion of that would be due to this new levy proposal.
In 2021, the federal deficit totaled nearly $2.8 trillion. Should this proposal pass through Congress, we could see nearly half of the deficit decrease over the next ten years.
When would the Billionaire Minimum Income Tax be enacted?
There is still uncertainty surrounding Congress moving forward on Biden’s proposal. Last year, Senate Democrats proposed a billionaires’ tax that ultimately didn’t proceed.
As Congress continues to discuss and debate the new billionaire tax proposal, Optima will update our readers and clients accordingly.
For tax debt assistance, call Optima at (800) 536-0734 for a free consultation today.