Joe Biden's plans would target the ultra-wealthy for more tax dollars — and they're getting nervous: report

Joe Biden's plans would target the ultra-wealthy for more tax dollars — and they're getting nervous: report
(Official White House Photo by Adam Schultz)

President Joe Biden delivers remarks on his economic vision Wednesday, March 31, 2021, at the Carpenters Pittsburg Training Center in Pittsburgh.

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President Joe Biden has been highly critical of the corporate tax cuts of the Trump era, complaining that the Tax Cuts and Jobs Act of 2017 mostly benefitted the wealthiest Americans while doing precious little for the United States' middle class. Biden has proposed raising the corporate tax rate from 21% to 28%, which would still be lower than the top marginal rate of 35% that existed before Donald Trump's presidency — and Biden has said he's flexible about the 28% proposal. Biden has also proposed increasing capital gains taxes. And some ultra-rich Americans are not happy with the tax hikes Biden is proposing.

In a Bloomberg News article published this week, journalist Ben Steverman reports that America's ultra-rich fear Biden will take away some of the tax loopholes they benefit from — "ultra" being the operative word.

"The rich shouldn't be too afraid of Joe Biden's tax plans — it's the really rich who should be getting nervous," Steverman explains. "The U.S. president is set to unveil a tax package on Wednesday that promises to raise revenues from those earning $400,000 or more a year, but executives and professionals making over $500,000 annually already pay relatively high tax rates. What has potentially far greater ramifications is that Biden and Democrats in Congress are threatening to target a much wealthier group — the growing number of Americans with fortunes starting in the tens of millions of dollars, who often pay lower tax rates than many middle-class families."

Biden and Sen. Bernie Sanders of Vermont, Steverman notes, "have floated plans to end a long list of sometimes-obscure deductions, exclusions and loopholes that are favorites of the 0.1%. If some of this passes, it will transform how the very wealthy manage their portfolios and pass on their assets to future generations."

It seems the White House is happy to have it publicly known that Biden's plans make the most wealthy nervous. Reading Bloomberg News' reporting, White House Chief of Staff Ronald Klain humorously tweeted:

This week in the Washington Post, journalist Jeff Stein reports that in order to make sure his proposed tax hikes on the ultra-wealthy are actually paid rather than avoided, Biden is proposing beefing up tax enforcement at the Internal Revenue Service.

"President Biden's American Families Plan, set to be released ahead of the president's joint address to Congress on Wednesday, calls for devoting hundreds of billions of dollars to child care, universal prekindergarten, and paid family and sick leave, among other domestic priorities," Stein explains. "The tax side of the plan to pay for those efforts includes increasing the amount of capital gains paid by investors above $1 million, as well as increasing the top income tax rate. But probably the single biggest source of new revenue in the plan comes from dramatically expanding the clout of the nation's tax agency."

Stein notes that according to the New York Times, Biden White House officials are proposing increasing the IRS' budget "by $80 billion over 10 years."

"If approved, the coming White House proposal would represent a remarkable change to the IRS, which has been beset for more than a decade by problems from steep budget cuts and a growing list of responsibilities," Stein reports. "The IRS lost roughly 18,000 full-time positions after 2010, due primarily to cuts pushed by Republicans in Congress under President Barack Obama, with the number of auditors falling to lows unseen since the 1950s."

He added: "White House officials have eyed raising as much as $700 billion from toughening IRS enforcement and auditing over 10 years, two of the people said, although the precise amount in the plan remained unclear. Enforcement will be focused on the wealthy, the people said."

One conservative commentator was so appalled by the idea of increasing tax enforcement that he said the idea was "insane" without any further explanation:

Bloomberg News' Steverman points out that some of the wealthiest Americans would be more affected by capital gains tax hikes than income tax hikes because they are "living off investments" rather than "primarily earning money through their labor."

Steverman notes, "Biden is planning a dramatic hike to the capital gains rate, bringing it to the ordinary income tax levels for those earning $1 million or more. That may simply discourage the wealthy from ever selling their winning investments, although the president and other Democrats have floated various proposals that make capital-gains taxes harder to avoid."

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