By Clara Wong, age 14
On March 9, Biden proposed a minimum 25% tax rate to be imposed upon America’s billionaires, referred to as the “billionaire tax.” Billionaires are not thrilled.
Every year, the president submits a fiscal budget to Congress that holds documents containing information on government funding. All budgetary publications must then be approved by Congress, which is ultimately paid for with taxes. All necessary factors of our society are supported by taxes: Social Security, health programs, food programs, everything needed to keep our country running.
Millionaires and billionaires in the United States pay surprisingly lower tax rates than middle-class workers. In a typical year, billionaires pay just 8% in total income tax. Comparatively, on average, a teacher pays 22%. Those with a high net worth often gain most of their income from investments, such as property and stock holdings. This is recorded as passive wealth, and not taxable income like the average worker. Therefore, investors’ tax rates are significantly lower than that of the average U.S. taxpayer, differentiating them from traditional earners.
Since 2020, billionaires’ wealth in the United States has increased by $2.7 million each day. According to a report released by ProPublica, Jeff Bezos, Elon Musk, Michael Bloomburg, Carl Icahn, George Soros and Warren Buffett all managed to avoid paying a single dime in federal taxes for at least one year. During the height of the pandemic, Jeff Bezos’ net worth increased by $75 billion, Mark Zuckerberg’s by $74.2 billion, and Elon Musk’s by $150 billion.
Biden claims the billionaire tax will only affect a small number of people, and those earning less than $400,000 will not have to pay extra taxes. A similar tax in March of 2021 was proposed by Biden as part of his ambitious Build Back Better plan. That bill was killed by the deciding vote of Democratic Sen. Joe Manchin. The negative reactions to Biden’s previous proposal may be a bad sign for this new proposed tax.
“The ultra-rich benefit from our communities, from our public infrastructure and the labor of working families, and because of our backwards tax system, they can avoid paying the taxes that they owe,” explained New York state Sen. Gustavo Rivera. “We must restructure our tax system for fairness.”