US President Joe Biden is expected to propose a minimum tax on billionaires as part of the fiscal 2023 budget to be announced on Monday.
According to a White House fact sheet released over the weekend, the proposal to impose higher taxes on the wealthiest Americans, dubbed the 'Billionaire Minimum Income Tax,' would set a tax rate of 20% on households worth more than US$100mln, primarily targeting the nation's 700-plus billionaires.
It aims to drum up US$360bn over 10 years from a group that pays very little in taxes compared to middle-class Americans.
Over the next decade, the proposal would help cut projected budget deficits by more than US$1 trillion, according to the document, which added that the tax "would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters".
Politicians from the left have long called for higher taxes on billionaires, but the new measure still needs congressional approval.
Former President Trump's administration left behind a budget deficit equal to 14.9% of the entire US economy.
The new proposal will drastically change billionaires' taxes, wuth University of California Berkeley economist Gabriel Zucman calculating that Tesla Inc (NASDAQ:TSLA) chief executive officer Elon Musk would pay an additional US$50bn in taxes, while Amazon.com Inc (NASDAQ:AMZN) founder Jeff Bezos would pay just over US$35bn more.
The top 0.01% of US households would be affected, with households worth US$1bn or more expected to generate half the revenue in this category.
In addition to earnings, The Washington Post reports the 20% tax rate would apply to unrealised gains on billionaires' investments, such as stocks and bonds, which currently are not subject to taxes until they are sold.