23 september 21
Political cowardice means those funding Joe Biden’s ambitious social policy plan want to leave the mega-rich unscathed
This week, House Democrats released their proposed tax increases to fund Joe Biden’s $3.5tn social policy plan.
The biggest surprise: they didn’t go after the huge accumulations of wealth at the top – representing the largest share of the economy in more than a century.
You might have thought Democrats would be eager to tax America’s 660 billionaires whose fortunes have increased by $1.8tn since the start of the pandemic, an amount that could fund half of Biden’s plan and still leave the billionaires as rich as they were before the pandemic began.
Elon Musk’s $138bn in pandemic gains, for example, could cover the cost of tuition for 5.5 million community college students and feed 29 million low-income public-school kids, while still leaving Musk $4bn richer than he was before Covid.
But senior House Democrats decided to raise revenue the traditional way, taxing annual income rather than giant wealth. They aim to raise the highest income tax rate and apply a 3% surtax to incomes over $5m.
The dirty little secret is the ultra-rich don’t live off their paychecks.
Jeff Bezos’s salary from Amazon was $81,840 last year, yet he rakes in some $149,353 every minute from the soaring value of his Amazon stocks, which is how he affords five mansions, including one in Washington DC which has 25 bathrooms.
House Democrats won’t even close the gaping “stepped-up basis at death” loophole, which allows the heirs of the ultra-rich to value their stocks, bonds, mansions and other assets at current market prices – avoiding capital gains taxes on the entire increase in value from when they were purchased.
This loophole allows family dynasties to transfer ever larger amounts of wealth to future generations without it ever being taxed. Talk about an American aristocracy.
Biden wanted to close this loophole but House Democrats balked.