President Joe Biden will use his State of the Union address to call for a new tax on billionaires.
Biden will call on Congress to pass legislation that would levy new taxes on the wealthiest people, the White House said in a lengthy information sheet discussing Biden’s economic agenda as well as what to expect for Tuesday’s much-anticipated speech.
“President Biden is a capitalist and believes that anyone should be able to become a millionaire or a billionaire. He also believes that it is wrong for America to have a tax code that results in America’s wealthiest households paying a lower tax rate than working families,” the White House said. The information sheet also claimed that billionaires pay an average tax rate of 8%.
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While the White House didn’t elaborate on specifics about the proposed tax, a previous proposal that was considered would have altered the tax system by imposing a 23.8% annual tax on all the gains on billionaires’ assets in a given year, including unrealized capital gains (which aren’t currently taxable). It would have also applied to the small number of high earners who made more than $100 million annually.
There would likely be legal challenges that would focus on whether a billionaire tax is an unconstitutional federal levy on property or a form of income tax. Whether unrealized gains can be considered income has been a subject of debate among scholars.
The agenda item will be seen as largely aspirational, as it has virtually no chance of passing in the next two years given that the House is controlled by Republicans and even some Democrats in the Senate, like centrist Sen. Joe Manchin (D-WV), may be reluctant to support such a proposal.
During the State of the Union, Biden will also call for quadrupling the tax on corporate stock buybacks. That comes after a 1% excise tax on corporate buybacks was imposed as part of the Inflation Reduction Act, which was passed last year by Congress.
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“Last year, oil and gas companies made record profits and invested very little in domestic production and to keep gas prices down — instead they bought their own stock, giving all that profit to their CEOs and shareholders,” the White House said.
Biden’s Tuesday speech is set to begin at 9 p.m. EST.
