Vice President Kamala Harris has endorsed President Joe Biden’s proposal to increase taxes on wealthy Americans and corporations, including implementing a 25% minimum tax on total income exceeding $100 million in assets. As of June 2023, there were over 10,000 centi-millionaires living in the U.S. Harris argues that it is unfair for the wealthy to pay lower tax rates than teachers and firefighters, and supports a billionaire minimum tax and ensuring that corporations pay their fair share. However, experts believe that Harris’s plan is unlikely to gain traction politically.
If enacted, taxpayers with wealth exceeding $100 million would be required to report unrealized gains for each asset class annually, along with original purchase price, market value, and total liabilities. Currently, investors pay capital gains taxes of 0%, 15%, or 20% upon selling a profitable asset owned for at least one year, along with an additional 3.8% net investment income tax for higher earners. Despite Biden pushing for the billionaire minimum tax in his budgets, these proposals have not gained sufficient support.
The business community, including billionaire entrepreneur Mark Cuban, has pushed back against the idea of taxing unrealized gains. Cuban believes that taxing unrealized gains would harm the stock market. Policy experts also criticize aspects of Biden’s proposed billionaire minimum tax, pointing out potential administrative and compliance challenges, liquidity concerns, possible gaming, and IRS disputes. Some experts argue that the proposal is unworkable and moves away from sound tax policy, particularly following a recent Supreme Court ruling.
While many Americans agree with the idea of higher taxes on the wealthy, there are concerns about the practicality and effectiveness of implementing a billionaire minimum tax. Policy experts believe that the proposal could face legal challenges and practical obstacles, including liquidity concerns and possible IRS disputes. The Supreme Court ruling in June raised questions about the constitutionality of wealth taxes, adding further complexity to the debate. Despite the support from Harris and Biden, it remains unclear whether the proposal will be able to overcome these challenges and gain sufficient political support in the future.
