Biden Embraces G20-Proposed 2% Wealth Tax To Battle ‘Racial Wealth Inequality’

Biden and Yellen support a global minimum tax on corporations. And a new wealth tax scheme is now in the works…

Authored by Mike Shedlock via MishTalk.com

Watch Out for a Global Wealth Tax

The Wall Street Journal says Watch Out for a Global Wealth Tax

In our new socialist age, the demand to tax and redistribute income is insatiable. The latest brainstorm arrives in a proposal by four countries in the G-20 group of nations to impose a 2% wealth tax on the world’s billionaires.

“The tax could be designed as a minimum levy equivalent to 2% of the wealth of the super-rich,” write economic ministers of Germany, Spain, Brazil and South Africa in the Guardian. They say the levy would raise about $250 billion a year from some 3,000 billionaires and “would boost social justice and increase trust in the effectiveness of fiscal redistribution.” The countries plan to float this at the next G-20 meeting in June.

Presumably, the plan is to have the G-20 endorse the idea, including President Biden and Treasury Secretary Janet Yellen. Then negotiate a global tax deal that would wait until Democrats control all of the U.S. government to approve it, even if that takes many years.

That’s more or less what Ms. Yellen has done with her global minimum tax on corporations, and the four ministers are candid in saying this is their model. The wealth tax “is a necessary third pillar that complements the negotiations on the taxation of the digital economy and on a minimum corporate tax of 15% for multinationals,” the ministers write.

Ms. Yellen went along with the first two pillars, though as we’ve written they subject American companies to foreign tax raids of the kind the U.S. government has long opposed. An architect of the wealth tax idea is French socialist Gabriel Zucman, who was also behind Ms. Yellen’s global minimum tax. Once a global wealth tax is in place, you can be sure that billionaires won’t be the last target.

The Biden Administration is run by liberal internationalists who are happy to cede more power to multilateral institutions. President Biden is also campaigning on a wealth tax of his own that would impose the highest tax rates on Americans since before the Reagan tax reform. For this crowd, taxing American billionaires to redistribute income around the world is all too imaginable.

I used to dismiss ideas like this. Not anymore.

Letting the G-20 set US tax rates would be unconstitutional, but since when does Biden give a damn?

Besides, if Democrats get control of the Senate, House and White House they may try to pack the courts.

President Biden and Treasury Secretary Janet Yellen embrace a massive wealth tax redistribution scheme including taxes on unrealized gains in their Fiscal Year 2025 proposal.

Advancing Equity Through Tax Reform

Please consider Fiscal Year 2025 Revenue Proposals on Racial Wealth Inequality

The revenue proposals in the Administration’s Fiscal Year 2025 Budget (U.S. Treasury, 2024) would raise revenues, help ensure the wealthy and large corporations pay their fair share, expand tax credits for working families, and improve tax administration and compliance.

Research has demonstrated that wealth gaps are one of the primary “mechanisms for
perpetuating racial economic inequality”.

The millions of African Americans who left the southern United States to escape Jim Crow laws faced formal and informal employment, educational, and housing discrimination in destination cities in the North and West, including discriminatory “redlining” policies that started in the 1930s. In addition to funneling Black households into neighborhoods with lower home values, research has illustrated the extent to which redlining introduced place-based policies that affected the employment, education, and health of residents in those neighborhoods, all of which are directly related to income and wealth accumulation.

Biden’s Wealth Tax Remedy

• A minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth greater than $100 million.
• Requiring the wealthiest taxpayers to pay at least 25% of their total income in taxes will reduce economic disparities among Americans and raise needed revenue
• Inheritance Taxes: In 2019, thirty percent of White families received an inheritance compared to 10 percent of Black families and 7 percent of Hispanic families. The Administration’s Fiscal Year 2025 Budget would limit the duration of the GST [Generation Skipping Trust] tax exemption.
• The Budget would tax long-term capital gains and dividends at ordinary rates for taxpayers with more than $1 million in income, curtailing a tax expenditure the benefits of which accrue disproportionately to White families. It would also treat transfers of appreciated property as realization events and impose a minimum tax on the wealthiest families, while expanding tax credits that improve equity.

Biden Explanations

There’s still more if you dive into General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals

The explanations are 256 pages long. The following points do not represent all of the ways the administration is coming after you.

I have a 15-point synopsis at the end for those just wishing to see general ideas.

Here are some details.

• The child tax credit would be expanded through 2025, would permanently be made fully refundable, determined monthly, and paid out in advance. Reforms to the delivery of the credit would facilitate take-up. The earned income tax credit would also be expanded to cover more workers without children. The premium tax credit expansion first enacted in the American Rescue Plan Act of 2021 and extended in the Inflation Reduction Act of 2022 would be made permanent, making health insurance more affordable for millions of families.
• Raising the corporate income tax rate is an administratively simple way to raise revenue to pay for the Administration’s fiscal priorities.
• The proposal would increase the tax rate for C corporations from 21 percent to 28 percent. The effective global intangible low-taxed income (GILTI) rate would increase to 14 percent under the proposal.
• The proposal Revise the Global Minimum Tax Regime, Limit Inversions, and Make Related Reforms described later in this text would further increase the effective GILTI rate to 21 percent.
• A new 25- percent minimum income tax would be imposed on extremely wealthy taxpayers. For high income taxpayers, gaps in the law that allow some pass-through business owners to avoid Medicare taxes would be eliminated and Medicare tax rates would be increased. Additional loopholes, including the carried interest preference and the like-kind exchange real estate preference, would be eliminated for those with the highest incomes. Together these reforms would sharply curtail tax preferences that allow the wealthy to pay lower tax rates on their investment income and exacerbate income and wealth disparities, including by gender, geography, race, and ethnicity.
• The child tax credit would be expanded through 2025, would permanently be made fully refundable, determined monthly, and paid out in advance. Reforms to the delivery of the credit would facilitate take-up. The earned income tax credit would also be expanded to cover more workers without children.
• The proposal would increase the tax rate on corporate stock repurchases to 4 percent.
• The Secretary would be granted authority to promulgate any regulations necessary to carry out the purposes of the proposal, including (a) coordinating the application of the proposal with other interest deductibility rules, (b) defining interest and financial services entities, (c) permitting financial reporting groups to apply the proportionate share approach using the group’s net interest expense for U.S. tax purposes rather than net interest expense reported in the group’s financial statements, (d) providing for the treatment of pass-through entities, (e) providing adjustments to the application of the proposal to address differences in functional currency of members, (f) if a U.S. subgroup has multiple U.S. entities that are not all members of a single U.S. consolidated group for U.S. tax purposes, providing for the allocation of the U.S.
• The proposal would repeal: (a) the enhanced oil recovery credit for eligible costs attributable to a qualified enhanced oil recovery project; (b) the credit for oil and gas produced from marginal wells; (c) the expensing of intangible drilling costs; (d) the deduction for costs paid or incurred for any qualified tertiary injectant used as part of a tertiary recovery method; (e) the exception to passive loss limitations provided to working interests in oil and natural gas properties; (f) the use of percentage depletion with respect to oil and gas wells; (g) two year amortization of geological and geophysical expenditures by independent producers, instead allowing amortization over the seven-year period used by major integrated oil companies; (h) expensing of exploration and development costs; (i) percentage depletion for hard mineral fossil fuels; (j) capital gains treatment for royalties; (k) the exemption from the corporate income tax for publicly traded partnerships with qualifying income and gains from activities relating to fossil fuels; (l) the OSTLF and Superfund excise tax exemption for crude oil derived from bitumen and kerogenrich rock; and (m) accelerated amortization for air pollution control facilities.
• The eligibility of the petroleum taxes dedicated to the OSLTF and Superfund for drawback would be eliminated.
• An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms. Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.
• The proposal would expand the NIIT base to ensure that all pass-through business income of high-income taxpayers is subject to either the NIIT or SECA tax.
• The proposal would increase the additional Medicare tax rate by 1.2 percentage points for taxpayers with more than $400,000 of earnings. When combined with current-law tax rates, this would bring the marginal Medicare tax rate up to 5 percent for earnings above the threshold. The threshold would be indexed for inflation.
• The proposal would increase the top marginal tax rate to 39.6 percent. The top marginal tax rate would apply to taxable income over $450,000 for married individuals filing a joint return and surviving spouses, $400,000 for unmarried individuals (other than surviving spouses and head of household filers), $425,000 for head of household filers, and $225,000 for married individuals filing a separate return. After 2024, the thresholds would be indexed for inflation using the CPI-U, which is used for all current thresholds in the tax rate tables.
• Under the proposal, the donor or deceased owner of an appreciated asset would realize a capital gain at the time of the transfer. The use of capital losses and carry-forwards from transfers at death would be allowed against capital gains and up to $3,000 of ordinary income on the decedent’s final income tax return, and the tax imposed on gains deemed realized at death would be deductible on the estate tax return of the decedent’s estate (if any). Gain on unrealized appreciation also would be recognized by a trust, partnership, or other noncorporate entity that is the owner of property if that property has not been the subject of a recognition event within the prior 90 years.
• Preferential treatment for unrealized gains disproportionately benefits high-wealth taxpayers and provides many high-wealth taxpayers with a lower effective tax rate than many low- and middle-income taxpayers. Preferential treatment for unrealized gains also exacerbates income and wealth disparities, including by gender, geography, race, and ethnicity. The proposal would impose a minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) greater than $100 million.
• The proposal would require a high-income taxpayer with an aggregate vested account balance under tax-favored retirement arrangements that exceeded $10 million as of the last day of the preceding calendar year to distribute a minimum of 50 percent of that excess.
• The provision would prohibit a rollover to a Roth IRA of an amount distributed from an account in an employer-sponsored eligible retirement plan that is not a designated Roth account (or of an amount distributed from an IRA other than a Roth IRA) for a high-income taxpayer.
• Increase the maximum credit per child to $3,600 for qualifying children under age 6 and to $3,000 for all other qualifying children. Increase the maximum age to qualify for the CTC from 16 to 17. The proposal would make the CTC fully refundable, regardless of earned income.
• The first-time homebuyer credit would be equal to ten percent of the purchase price of a home, up to a maximum credit of $10,000. For multiple individuals who purchase a home together, the maximum credit would be allocated proportionally to ownership interest in the purchased home or in a manner determined by the Secretary in published guidance. The credit allocated to a married individual filing a separate return would not exceed $5,000. The home must be in the United States.
• Upon disposition, any measured gain on an item of section 1250 property held for more than one year would be treated as ordinary income to the extent of the cumulative depreciation deductions taken after the effective date of the provision. Depreciation deductions taken on section 1250 property prior to the effective date would continue to be subject to current rules and recaptured as ordinary income only to the extent that such depreciation exceeds the cumulative allowances determined under the straight-line method. Any gain recognized on the disposition of section 1250 property in excess of recaptured depreciation would be treated as section 1231 gain. Any unrecaptured gain on section 1250 property would continue to be taxed to noncorporate taxpayers at a maximum 25 percent rate.
• In general, no Federal income tax is imposed concurrently on a policyholder with respect to the earnings credited under a life insurance or endowment contract. Furthermore, amounts received under a life insurance contract by reason of the death of the insured generally are excluded from the gross income of the recipient. The proposal would limit the tax benefits for private placement life insurance and annuity contracts.
• The proposal would expand the regulatory authority under which the Secretary may require taxpayers to furnish information relating to the verification and computation of the FTC [Foreign Tax Credit].
• A separate proposal would first raise the top ordinary rate to 39.6 percent (43.4 percent including the net investment income tax). An additional proposal would increase the net investment income tax rate by 1.2 percentage points above $400,000, bringing the marginal net investment income tax rate to 5 percent for investment income above the $400,000 threshold. Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.

Massive Wealth Distribution Scheme.

The administration went after anything and everything from wealth taxes, huge jumps in marginal rates, REIT, Roth IRA conversions, etc.

Here are the key changes, and I may have missed some.

Fifteen Key Points

1. The top marginal rate on long-term capital gains jumps to 44.6 percent.
2. Deductions for oil and gas companied eliminated.
3. 30 percent tax on electricity used in mining cryptos
4. Restrictions on conversions to Roth IRA
5. Forced acceleration of IRA withdrawals
6. Taxes on insurance policies
7. Expanded Child Tax Credits
8. Earned Income Tax Credits to include those with no kids.
9. Restrictions on trusts to avoid inheritance taxes
10. Corporate minimum taxes
11. Homebuyer tax credits
12. Minimum 25 percent tax on unrealized stock gains for wealthy individuals
13. Marginal Medicare tax rate upped to 5 percent
14. Tax rate for C corporations goes to 28 percent from 21 percent. The effective global intangible low-taxed income (GILTI) rate would increase to 14 percent.
15. If there is anything ambiguous, the Secretary of the Treasury gets to determine what the law is.

If you have any money or assets, Biden is coming after you. He is also going after oil and gas companies, corporations, and Bitcoin to fund massive wealth distribution schemes.

This is on grounds “Research has demonstrated that wealth gaps are one of the primary mechanisms for perpetuating racial economic inequality“.

Source: Zero Hedge