This year, the U.S. national debt topped a whopping $30 trillion for the first time in the history of our country. It isn’t a mystery how we got here.
The deficit-busting corporate tax cuts, passed in 2017, reduced the already low tax burden on the super-wealthy. The pandemic, which resulted in a decline in incomes and several immense recovery spending packages, pushed us toward this grim milestone years before previously projected.
Keep in mind, as the deficit has expanded in recent years, so has the wealth of America’s billionaires — people like Jeff Bezos and Elon Musk. Bezos recently got into a spat with the White House on Twitter over making billionaires pay the same tax rate as teachers and firefighters.
The long-term fiscal health of our country relies on getting the debt and deficit under control. The White House recently proposed a policy that would help us do just that. Enacting a minimum income tax on billionaires would fund crucial efforts to help struggling Americans now — such as lowering the cost of child care and expanding affordable housing — while reducing the deficit and minimizing the burden on the next generation. Rarely is there such a simple, politically popular, commonsense solution to such a massive problem.
Over the past few years, the spending power of working Americans has plummeted and our national debt has skyrocketed, while the richest Americans are doing better than ever. During the pandemic, billionaires got over 52% richer, increasing their wealth by an incredible $2.1 trillion.
Meanwhile, billionaires are able to exploit the tax code because it favors them and is riddled with loopholes — allowing them to avoid their patriotic duty to pay their fair share. In fact, the wealthiest 400 Americans paid an average federal tax rate of just over 8% of their income between 2010 and 2018. By comparison, the average American paid a 13.3% tax rate on their income in 2018. It is unacceptable that teachers, nurses and firefighters are forced to pay a higher tax rate than the wealthiest among us.
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Billionaires don’t live on a salary, like you and me — instead, they acquire most of their income through assets and borrow against their accumulated gains, which the federal government doesn’t tax until their holdings are sold. Billionaires reduce their tax burden by avoiding payments on unrealized capital gains, which allows them to dodge and defer paying taxes almost entirely. The rest of us don’t have that luxury; we pay taxes on every dime we earn.
My local county assessor recently sent me a letter informing me that the value of my home had increased and, as a result, my property tax also would be going up. If working families have to pay more on the increased wealth they own (for most, their home is their biggest investment), then why shouldn’t billionaires pay taxes on the increased wealth of their portfolios?
To close this massive loophole, the White House’s recent budget proposal includes a 20% minimum tax rate on households worth more than $100 million. Under this plan, the richest Americans would pay at least 20% in taxes on their full income, including salaries and income from unrealized gains.
Another proposal for a billionaire income tax that has support in the U.S. Senate is an annual tax on capital gains and losses for about 700 ultra-wealthy Americans. These are taxes that are already owed; this new tax structure would just make them due annually, rather than at the time of sale. It would generate over $500 billion dollars in revenue.
Taxing billionaires fairly is a popular concept across the board. A bipartisan supermajority of Americans supports these proposals to ensure billionaires pay their fair share. The public understands that, while only a tiny few would be subject to these taxes, everyone would benefit from reducing our nation’s budget deficit and increasing funding for Medicare and other federal programs.
We can’t keep kicking the can down the road and risk leaving a national economic catastrophe for our children and grandchildren that would be impossible to clean up. The ultra wealthy should pay their part, like the rest of us. Ensuring they do so will have a huge return on investment. A minimum income tax on billionaires is a no-brainer — it’s fiscally smart, it’s fair-minded, it is what the American people want.
