The Tax Cuts and Jobs Act of 2017 lowered taxes for the ultrawealthy and large corporations.
According to the Wall Street Journal, the White House announced Saturday that President Joe Biden would propose a minimum tax that would apply on a handful of ultrawealthy households and would reportedly generate $360 billion in revenue for the United States. Biden's proposal would reverse policies enacted by former President Donald Trump and congressional Republicans that reduced taxes for millionaires and billionaires.
If enacted, the legislation would impose a minimum tax of 20% on the income and assets of the fewer than 20,000 U.S. households that are worth more than $100 million dollars.
While the Biden administration has not yet released the full details of its proposed budget, the New York Times reported on Monday that, according to a senior administration official, it will support policies "that will reduce energy, health care, child care and other costs for families."
Additionally, Cecilia Rouse, chair of the White House Council of Economic Advisers, told the National Association for Business Economics conference on March 21 that improving access to prescription drugs, health care, and child care would be "reflected" in the Biden budget.
Revenue from a tax on billionaires, if enacted by Congress, could fund many of the administration's priorities.
It would reverse the effects of the Tax Cuts and Jobs Act of 2017 signed into law by Trump after it passed the House and the Senate with only Republican votes.
After the act was made law, the wealthiest families in America paid taxes at a lower rate than working-class families did for the first time in U.S. history. Wealthy families paid an effective tax rate of 23%, while working-class taxpayers paid 24.2%, according to an analysis of 2018 returns.
The disparity was a result of the law's benefits being skewed in favor of the wealthy and large corporations.
The Trump tax cuts also included a provision, championed by Sen. Ron Johnson (R-WI), that allowed the wealthy to evade taxation via the use of "pass-through" companies. In an analysis of revenues published in August 2021, ProPublica reported that donors who had contributed $20 million to Johnson's reelection campaign would receive over $500 million in tax savings from the law. Furthermore, the outlet found that 82 ultrawealthy households saved over $1 billion on their taxes under the law.
The Center for Public Integrity suggested in February 2019 that passage of the Trump tax cuts was secured after wealthy donors increased the pace and quantity of their donations to Republican candidates in 2017. After giving more to Republicans, these same donors saw their tax obligations decrease.
In the years since the tax cuts were passed, while most people's income has decreased during the COVID-19 pandemic, the wealthiest Americans have seen their fortunes increase. A study conducted by Oxfam International found that the fortunes of the world's 10 richest men, most of whom are Americans — including Jeff Bezos, Bill Gates, Mark Zuckerberg, Warren Buffett, Elon Musk, and Steve Ballmer — more than doubled in 2020-2021, from $700 billion to $1.5 trillion.
Published with permission of The American Independent Foundation.