Last Updated: January 18, 2022
The NY Times reports that President Joe Biden aims to push harder to increase taxes on the rich. Biden is attempting to get the Senate and Democrats to agree to his $3.5 trillion bill, with which he plans to fund his economic agenda and expand federal efforts to fight climate change.
On Wednesday, Biden wrote on his Twitter account: “I’m sick and tired of the super-wealthy and giant corporations not paying their fair share in taxes […] it’s time for it to change.” This is not the first time Biden has expressed his aspirations to increase taxes on the rich. Four months ago—speaking at a community college in Norfolk, Virginia—he made the case to raise taxes on the rich because he believes that they pay less than their fair share.
White House Reports: Wealthy Pay Only a Portion of What They Should
After Biden wrote on Twitter that the time for a change has come, White House economists on Thursday published a new analysis comparing what mainstream Americans pay in taxes against the wealthiest Americans. The analysis revealed that the richest (those with a net worth of $2.1 billion to $160 billion) pay just over 8% in taxes annually. Moreover, the White House analysis indicated that the wealthiest pay even less than what other analyses have shown.
Greg Leiserson (senior economist at the Council of Economic Advisers) and Danny Yagan (chief economist at the budget office) noted that “the wealthy can choose when their capital gains income appears on their income tax returns and even prevent it from ever appearing.” In other words, the IRS has no idea of the actual capital gains income of the wealthy. “If a wealthy investor never sells stock that has increased in value, those investment gains are wiped out for income tax purposes when those assets are passed on to their heirs under a provision known as stepped-up basis,” Leiserson and Yagan further wrote.
President Biden plans to change both tax treatments. His goal is to raise the capital gains rate to match the rate on wage income and eliminate the stepped-up basis for the wealthy.
With the beginning of the Biden era and his new proposals of taxing the rich (including crypto tax measures), the wealthy should begin searching for help in managing their taxes via tax services and, if needed, crypto tax services.