The White House will release a plan today to impose a minimum 20% tax rate that will apply only to American households worth $100 million or more.

                By                    Yaёl Bizouati-Kennedy

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The Billionaire Minimum Income Tax — part of the administration’s fiscal year 2023 budget — “would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters,” according to a White House document.

The White House said that more than half of the revenue will come from households worth more than $1 billion, and it’s expected to reduce the deficit by about $360 billion in the next decade.

“Through the Billionaire Minimum Income Tax and other measures, the President’s budget will reduce the deficit by another $1 trillion over the decade,” according to the document.

“President Biden is a capitalist and believes that anyone should be able to become a millionaire or a billionaire. He also believes that it is wrong for America to have a tax code that results in America’s wealthiest households paying a lower tax rate than working families,” the White House said.

If a wealthy household is already paying 20% on their full income – standard taxable income plus unrealized income – they will pay no additional tax under this proposal. If tax-free unrealized income allows a wealthy household to pay less than 20% on their full income, they will owe a top-up payment to meet the 20% minimum, the White House explained.

“As a result, this new minimum tax will eliminate the ability for the unrealized income of ultra-high-net-worth households to go untaxed for decades or generations. The proposal allows wealthy households to spread initial top-up payments on unrealized income over nine years, and then five years for top-up payments on new income going forward. Stretching payment over multiple years will smooth year-to-year variation in investment income, while still ensuring that the wealthiest end up paying a minimum tax rate of 20%,” according to the White House.

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The plan added, “Only taxpayers with more than $100 million in annual income or more than $1 billion in assets for three consecutive years would be covered by the proposal.”

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