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
- The top marginal rate on long-term capital gains jumps to 44.6 percent.
- Deductions for oil and gas companied eliminated.
- 30 percent tax on electricity used in mining cryptos
- Restrictions on conversions to Roth IRA
- Forced acceleration of IRA withdrawals
- Taxes on insurance policies
- Expanded Child Tax Credits
- Earned Income Tax Credits to include those with no kids.
- Restrictions on trusts to avoid inheritance taxes
- Corporate minimum taxes
- Homebuyer tax credits
- Minimum 25 percent tax on unrealized stock gains for wealthy individuals
- Marginal Medicare tax rate upped to 5 percent
- 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.
- 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“.
Trump Will Not Face Another Trial Before the Election
On a political note, Supreme Court Arguments Show Trump Will Not Face Another Trial Before the Election
I have been told that a Professor from Colorado summed up this issue by saying:
Men who graduate from college marry women that graduate from college and they send their kids to college. Men that drop out of high school marry women that drop out of high school and their kids drop out of high school.
This must have been said years ago because today I would say: Men who dropout of high school get women who dropout of high school pregnant, and those kids drop out of high school.
Some researchers once named this process Inter-Generational Poverty.
First in line to pay up on his ill gotten gains should be Biden & Company. Rip off artist and agent of destruction of at least the past century.
How do you tax someone on an ‘ unrealised gain’?
What happens if it falls in value the day after the tax is levied? Is it indexed against inflation.. because if it isn’t you may not have made a gain at all.
Fix the money and lots of these gaps start getting smaller.
Lazy mofos. My Dad was on his own from the age of 12. He was Alpha Omega Alpha in med school, an endocrinologist, on the board governors of sports medicine, he was on the board of governors at the University of Kansas. He served as CEO of Long Beach Medical Hospital. My Dad’s brother went to an orphanage, became a dentist, was President of the Kansas Dental Association and CEO of Delta Dental.
Biden has lost his mind
oh boy
Will this backfire when we realize Oprah, Tiger Woods, Michael Jordan, LeBron James, Kanye West, and a bunch of other “pillars of society” are getting hit with this ??
Race trumps Reason. And maybe there will be a loophole for the “In” crowd.
Next will be taxing employed folks for “unrealized” wages.
Use it or lose it?
At this point it’s just a drop in the bucket anyway.
Unmentioned, but the heart of the discussion, is so-called unearned income or economic rent. This is what the classical economic authors were against (monopoly rents; absentee landlords): value for nothing (backed up by state force). We are so confused we don’t even see the core problem of economy, which is to marshal and husband resources as efficiently as possible, to produce, put things to work.
Financialization has managed to cloak everything in a mist of confusion.
Money should facilitate production instead of having production merely to facilitate money.
I wonder how long the list of unintended corollary effects would be ??
I have a plan for an alternative income tax: Tax a percentage of the assumed unrealized income babies will earn over their lifetime, just to get it over with. The government could spend the money before its value deflates due to inflation.
So the proposed new tax policy of the United States is “tax whitey”?
The effective tax policy of all possible totalitarian regimes, is to tax the productive, in order to transfer the loot to the leeching connected.
None of these taxes go to “blacks.” Just to negative-talent leeching trash, so they can feel better about their useless little selves by pretending to be “nicer to our ngas” that “those guys.”
Biden’s is a government. Hence it is a bad government. And furthermore, hence it is, always and everywhere and regardless, a worse government than no government at all.
Fair points. From the contributors to the non-contributors.
This is direct communism at its best. Not only theft of money not theirs but of ideas as well. Who would now invest into new ideas or corporations? Tax you on future gains? Are they going to pay you back when the stock decreases? You know the answer.
The US is the only industrial country that bases income tax on citizenship rather than residence. Don’t be surprised if more people follow Eduardo Saverin (one of the Facebook founders), move abroad and renounce their US citizenship, as more confiscatory taxes are levied on financially successful Americans.
When you renounce your citizenship the US still taxes you for another ten years.
They have no right to do this but they control the worlds banking system and can get away with it. Note that the BRICS are trying to set up a competing world banking system. If they succeed the US wealthy (and their money) will be gone in a flash.
Much as I hate to say it, Rand had exactly the right term: “looters.” And as we’re all naked before the state, it’s hard to imagine a strategy for evading any policies they adopt.
“A minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth greater than $100 million.”
With optimized inflation the median income will exceed $100 million by 2050 or so.
Depends on US Congressional largess.
The more they inflate, the more they take in taxes.
So far as inequality…
Stupid people typically make less money and accumulate less wealth.
Over the long run.
Buying lottery tickets is not a career.
As an investment professional, I fully expect many generous loopholes to be taken away which only pertain to the wealthiest 1% of Americans, such as Roth conversions, oil and gas partnership tax credits, and generation skipping trusts. However, taxing net worth/unrealized gains is stupid and unworkable.
The appraisal industry would be pumped if taxing unrealized gains went through.
The great news is that the Extra Tax Revenues will be simply handed over to Peoples of Color. Call the POC supplementary income stream, they will piss the extra money all over Peoples of Color like a water hose.
Just watch the Chappelle skit on reparations if you want to see the future
Sounds like they want to send a lot more $ for weapons to Ukraine, Israel, Taiwan etc. A lot more. While keeping the peasants fat, dumb and happy and at the same time importing more peasants.
I’m sure only positive outcomes will come out this. Nothing bad. LOL.
Sounds great to me if the DNC goes full and complete racism. If all the benefit goes to those whose DNA is African then all the taxes are taken from “rich” Africans whose DNA is African. Obama and all his followers need to pony up and help all those who have been cheated by “equity” over the past fifty years.
Rich POC’s will be Exempted.
This, a full blown alarm signal the uniparty is running out of borrowing power in markets.
Thru inflation there is very little actual Capital gains. It is a way to Tax existing wealth away as price increases do not equal wealth/Capital gains. They are price increases by making Fiat numbers larger, then placing Tax upon the larger number.
For those who do not have option nor wish to renounce US Citizenship what to do.
In coming years having a Roof over your head and Food in pantry will be true wealth for most.
Plant a Tree that can provide food for 15 to 100 years ahead. Up front costs are still not too large to place it out of reach. Then consider how upfront costs get amortized over 15 to 100 years. Hard to match that kind of investment return from any wealth creating source.
Fiat has reached its end get prepared to live in a different value system.
This used to be called eating the seed corn. If you eat the seed corn how are you supposed to plant and then have a Harvest.
How about killing the goose that laid the golden egg
Technically, none of these are wealth taxes. They are taxes on income created from wealth.
A wealth tax would be like a federal property tax that applies to all financial properties and assets.
Can unrealized losses be claimed?
This is the heart of “inclusion” and “equity.”
50 years in advance of the event ?
“equity” is shorthand for “From each according to his ability, to each according to his needs”. This is pure communism.
100% correct. Except those on the left always conveniently ignore the fact that this ideology has never worked in the history of mankind. No matter. They are hardwired to do stupid things with really bad outcomes.
Actually I don’t think that “need” enters the equations.
I think these concepts are based on “they have more than we do.”
Not really.
It is your stake in something.
It is what the ownership stake would be if you liquidated it today.
All look like sensible measures to me. Each time I come to the US I see more and more tents of homeless, mentally ill people. I doubt many of them are Mish subscribers. Don’t see many suggestions for how to fix these issues in US society. I just see a lot of selfishness from the comments. The counter side of all these “grab your money” schemes is methods to make society better and increase things like infra-structure spending.
First human beings appeared in Africa two millions of years ago. We are african american.
We must all identify as oppressed of african origin, and the problem is solved
– The revenue proposals in the Administration’s Fiscal Year 2025 Budget 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.
> Raise Revenue for Whom? Ukraine? Sure stealing tax dollars away from Citizens (where ALL tax hikes end up going directly to) will net the Government a whole lot of money. Not from the Wealthy/Rich Folks and Corporations as they are claiming, because they have a massive amount of ways, built into the system by their Friends in Government, to escape taxes. Write offs, tax breaks, campaign expenses etc. We already know how tax credits work, as they have been playing that charade for decades now. I thought they already improved Tax Administration and Compliance by hiring 100K? New IRS workers? They need to hire 100K? more? More Government Hires!
– Research has demonstrated that wealth gaps are one of the primary “mechanisms for perpetuating racial economic inequality”.
> Wealth Gaps have no Racial Quality to them. BUT hard work, morals, ethics, being on-time, doing extra, going beyond, taking training, increasing your skill set, learning new ways to do things are all ways to Stop whatever scam, ruse, BS this crap is espousing.
– 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.
> I want the Names of everyone of the Millions please. After that list is complete, I then want the exact place they were at, and where specifically they ended up, and for how long. I then want to know how much money, will go to each Specific Family Member by name and location. why specifically each individual received money, was it done through legal channels (ie Proof!), and all the copies of the paperwork for each person. Some sort of Proof must be required. A lot more as well, would need to be done, recorded, verified, and proven, but let’s get these Fe small ones out of the way first, shall we?
– Biden’s Wealth Tax Remedy > Please See Above!!!
– A minimum tax of 25 percent on total income > More and Higher Taxes, Yeah!
– The wealthiest taxpayers to pay at least 25% > Sure They Will, Like Always!
– Inheritance Taxes > Sounds and Looks More Like Inheritance Equality!
– The Budget would tax taxpayers with more than $1 million in income. > Of Course It ONLY Will.
– treat transfers of appreciated property as realization events and impose a minimum tax on the wealthiest families > Good to Know Only Wealthy Families Pass Down Homes To Their Children.
– Biden Explanations > He is a Dolt?
Yet another “Tax the Rich” scheme for the people to read. You know, the usual first pass, look good, feel good, hit all the talking points type of BS we get all the time from our Federal Government these days.
Tell us what we wish to hear, put it into print, explaining how you wish to do it. Point out all the good stuff coming to the masses in no time at all, and of course the obligatory “Vote For Me/Us” follow-up…
Then the hard truth comes out:
> They were not listening to You.
> What’s in Print, is not even remotely close to the final Bill.
> They will let us know Why they couldn’t do what they said later.
> All the good stuff didn’t materialize, but next time it will different.
> Don’t forget to Vote for Me/Us and Get More of the Same!!!
I think I will take a Hard Pass on that!
None of this looks like it makes much sense, but the tax on “unrealized capital gains” looks particularly egregious. Not that I have a lot of sympathy for the rich, but where are they supposed to get the money? Capital gains are not money until they are realized! So they would have to borrow or sell. If they are all selling, who will buy? And then what happens to the mark to market on all those spreadsheets? The so-called wealth will return to the ether from which it came. And that will include all the “wealth” in 401k’s.
And what happens if you pay capital gains taxes on “unrealized capital gains” and then the market takes away what the market giveth? Do you get the money back? Or does it become a carry-forward that is only useful if you have another capital gain?
Whoever designed this proposal is evil and intent on destroying the American capital markets.
“And what happens if you pay capital gains taxes on “unrealized capital gains” and then the market takes away what the market giveth?”
I don’t see this surviving the Supreme Court as it is not an apportioned direct tax, indirect tax or income tax. Of course bad ideas like this will return over and over until they finally get an amenable court.
But assuming it does I would think that
1) Once the tax is computed the security’s cost basis is reset to the value used to compute the tax. Otherwise the same gain could be taxed multiple times.
2) Unrealized losses will not be permitted. One would have to sell and realize them before being able to deduct them. Don’t expect this to be symmetrical. it isn’t now.
This would cause forced selling and, as you noted, will hit retirement accounts. The sellers will have to be smart about how they harvest gains as the market will no doubt try to front-run this forced selling. Combine this with 1) above and I’d bet within a few years the increased revenues projected do not materialize.
I do not understand why “income inequality” is such a big deal (and I’m not a 1%er by a long stretch). Everyone is wealthier … that i what should count. If I’m doing well, why should I care that Elon Musk, Jeff Bezos, and Mark Zucherberg are rich? I guess the point is that it is easy to unite the masses with envy … even if most of the envy is BS that people believe because of gaslighting. I question the whole premise that income inequality is so evil. Most of these rules will not directly affect me, but as the wealthy restructure and move assets (and maybe themselves) … the affect will be quite negative for the very people it purports to be helping. We really have become a nation of 7 year olds who can be taught to be angry about anything.
*You* could buy a house making a median income, but your kids won’t be able to. Wealth inequality is a one-way siphon into the pockets of the oldest living generation’s asset holders. At some point, it leads to catastrophe, where people aged 75 or older own everything, and “lock out” anyone under 55 from owning anything. That’s why most “successful” countries only have a lifespan of about 250 years.
Here are the current five oldest governments on the planet:
UK 304 years
USA 235 years
Norway 210 years
Belgium 193 years
Luxembourg 184 years
Tick, tock.
link to en.m.wikipedia.org
PS France “kind of” goes back to 1804, but not really.
I appreciate the downvote from the member/employee of the WEF. Thanks for reading.
…
“I do not understand why “income inequality” is such a big deal (and I’m not a 1%er by a long stretch).”
Neither do I which is why I quite trying to understand.
However, when you view it through a political lense it makes perfect sense (i.e. buying votes).
Because laws are put in place to create that inequality. People who gain power freeze out other people from taking that power from them through barriers in regulations that they themselves write and push through the legislative process. Artificial barriers to entry are how the wealthy siphon power and wealth from society. In effect, they artificially create monopolies.
Concrete example: housing.
You used to be able to purchase building materials and build your own house on your own land without any government involvement whatsoever. Now, every little piece of the process is micromanaged to the point that it requires you to bring in outside labor and artificially adds expense to the process.
Furthermore, without the GSEs and “agency backed” mortgages, housing prices would be nowhere near as high as they are today. Government backed mortgages and FHFA conforming loan limits were put in place to artificially drive asset prices higher. Without the ability to get those loans, housing prices would adjust (downward) to what the market could bear. According to the Fed’s April 2024 financial stability report, 88.8% of all mortgages are agency backed.
None of this will ever see the light of day.
Biden has the lowest approval rating (at this point in term) of any president in the last 100 years. He and his so-called Treasury secretary are both senile.
Biden is not actually going to go after his dwindling support base, and Congress would be destroyed by any of these proposals happening (they themselves would lose, not to mention their campaign donors).
We have enough Soros marxist paid political agitators already… there is no need for Mish to agitate for free
Don’t sleep on the effect that taxing insurance would have. This affects everyone, not just the rich. If you need 500K to protect your family you suddenly might need 600K if you are in a 20% tax bracket (which you’d likely be with a 500K windfall in a single year). So suddenly tens of millions of people aren’t going to have enough insurance and will be forced to go back and renegotiate policies or get new ones (many people are legally required to have insurance so can’t or won’t be able to skimp).
In other words this could be a 20% increase in cost of life insurance for most people which would be hugely inflationary. It will also be incredibly unpopular since it would affect so many people.
If life insurance payouts are ever taxed, there will be a new Boston Tea Party and it won’t be tea that’s thrown into Boston Harbor, it’ll be every legislator that voted for the bill.
ONE biggest loopholes
GATES non-profits loophole
put it into non-profit run by same, spend a LITTLE bit on some poor souls ideas
pay yourself and friends handsomely for life
—-
1) end this or put max amount – $50mil
2) make non-profit over $5 mil spend 90% on cause within 5 years of contribution
3) ban family and friends from running it
When the Federal Democratic Party and federal republican party receive a donation. What income tax rate do they pay?
“30 percent tax on electricity used in mining cryptos.”
I thought Bitcoin fixed this?
Kidding aside, Bitcoiners need to take heed here. Even if this doesn’t pass I view this as a warning shot across the bow.
Yes, until they put in a CDC where they can control everything about your income and expense … they will continue to attack any form of crypto as … in the end it’s all about control.
One easy way solve the wealth disparity is to mandate publicly traded corporations to equitably give stock options to indivual contributors vs everyone else. Stock options are the biggest creator of wealth AND wealth inequality in America today. Mandating them would go a long.way towards addressing thr wealth disparity.
How would you imagine this would work? Does every employee get the same amount regardless of pay/position or do you get more based on your salary/position? If you get more based on pay/position then how is this different from rich getting richer since more pay = more options. If everyone gets the same imagine most employees complaining the guy who delivers mail gets the same as them.
Also, presumably you realize options are just that, they aren’t stock. You still have to pay for the stock (at your option price). Since most employees live hand to mouth they won’t ever be buying the options since they have no money. Plus, how is your proposal any different (or better) than a company just giving a matching 401K and you as the employee using that free match to buy the company stock?
Yes and stock options are also the riskiest form of compensation. Mandating them would create both wealthier and poorer people. Keep in mind that more options means less salary compensation as well. I’ve declined jobs that were rich in options and lower in salary because given the company salary was more attractive.
Here’s another idea. Why not mind your own business and let people gravitate to the jobs who structure their pay in the way that suits their own risk tolerance rather than your fantasies? I mean you could always elect to take more salary and buy company stock in an IRA
Forget that motto “Be all that you can be.” Forget ambition.
I am reminded of a famous quote, although not famous enough that I can remember all of it word for word or cite who said it. The gist is a ‘bum’ saying “I am wealthier than Vanderbilt. I have all the money I want or need and I am happy. He has all that money and he is not happy.”
I admire that one co-founder of ‘Facebook’. He, an immigrant from Brazil, migrated to Singapore and renounced his US citizenship before the company went public, thus escaping most US taxation.
Taking note of so many people loathing and begrudging the wealthy their income and their riches, we get to some important questions: Do the people running corporations have to be paid so much for the companies to be profitable and successful? What is “their fair share” of income, of tax liability? In this country how much corporate profitability is excess and contrary to our social goals? Can a corporation be too big to be profitable?
And some last few questions that we should weigh: With all that money going to our government, are we getting good value for it? (Remember the 10% going to the Big Guy.) Would we get better value if some of that money remained in private hands instead of in Joe’s or the government’s hands?
What money. Have you seen the US debt lately ? Eventually we will all pay in the form of higher.intwrest rates and lower standard of living. Should everyone just relocate ?
That is an option many consider.
So the guy moved to Singapore to avoid a big whack of taxes. How long before others decide to do the same and it ends up that most of the billionaires become expats? No different to the billionaires that are leaving NYC and Chicago and relocating to low tax states but instead of crossing state borders to escape state taxes they will cross international borders to escape federal taxes.
Then will corporations also relocate overseas leaving yet more empty office space? Cheaper to employ staff overseas as well and with global communications there is no reason for most corporations to maintain their headquarters in a US city.
Professional players build complex games to take easy winnings.
Taxes are complex.
The question is, how can taxes be simplified without causing extreme distortions in critical areas? VATs and printing money come to mind. Printing money is a broad, simple wealth tax. Too bad there’s no limit to it, and huge incentives to test the limit.
Ah, but all taxes are sin taxes. Look at what is taxed to see what is considered by those who write tax laws to be bad. Look at what is not taxed to see what is good.
Anyway, I’m not a pro. I don’t see a mechanism in Mish’s summary for how a pro dodges the proposed unrealized gains taxes. We know it’s there, though.
BTW, that 90 year thing sure leaps out. What a weird exception. One wonders who it’s for.
Corporate AMT would work . Say 10%. Work with other countries to split tax revenue for offshorimg bur still operating in America. Change tax law to be based on operations instead of where the company has headquarters. When Amazon and.Walmart don’t pay any corporate income tax, it is time time for a corporate AMT. And this could apply across the board for LLCs and S corps. I would also have an AMT for nonprofits who keep getting away scot free. This includes churches, universities and hospitals. If the Dems were smart they would go after limousine liberals too.
This has worked well in places around the world like Singapore. They have a minimum corporate tax so corporations aren’t getting away paying nothing.
I dunno. Corporate taxes seem like screaming demands for sketchy behavior.
Apparently it’s hard enough to run a tax system for individuals when most individuals live and work inside a single tax system. Corps are often groups of individuals inherently scattered for useful economic reasons. Many, many corporations make their product and/or sell their products under multiple tax systems. And, that should and will be more true as time goes on.
Ha, ha. Not holding my breath for Dems to go after limousine liberals. Dems have pretty much circled the wagons around limo liberals and government workers (and kids trained to please authority figures) and are furiously spending their inheritance of other voting groups.
Wealth confiscation and money printing are the only ways to pay for that re-branded Green New Deal disaster, the Great Reset descent into authoritarianism, and all those endless, unwinnable proxy wars for the MIC.
I wouldn’t expect anything in this targeting the rich to get through the political donor class via their K-Street lobbyist proxies. But the rest of it coming for what’s left of the middle class is all but guaranteed….
Biden’s idiocracy never fails to astonish with it stupidity.
I’m confused. Aren’t these policies great for all those poor angry renters and black people? It’s seems like it’s a win for Biden camp. I guess all those renters will now be voting for Biden since they’ll be getting all that free cheddar…
boomers get free money from the workers via social security and now poor people get free money from the rich…it’s all one giant wealth transfer circle of life.
Boomers paid into social security all of their working life. Nothing free about what was paid for personally by them.
The money extracted by “Boomers” from the SS system eclipse their total contributions by the time they die.
As they should since those monies would have been either consumed by those folks while they were young and needed the money or invested and have quintupled in the meanwhile in a simple SP500 index fund. The only question is the degree to which they will eclipse their contribution. Some will NOT, my mother never drew a dime of SS as she passed away at 60. Her mother lived to 95 and clearly eclipsed it.
All of these rule changes, like we saw with the elimination of the stretch IRA for example, are after-the-fact changes so egregious because the people impacted cannot go back and change their well-researched planning on one set of rules undone politically 30 years later.
My 2 takeaways from just an average joe, non-wealthy individual is yet again another change to how average middle classers like me planned–life insurance not being taxed and elimination of stepped-up basis at death. They already changed the distribution rules for my heirs (nephews/niece) and this would change it again. There was no mention of income levels or wealth levels in the rules, it was all parties. So, like the removal of the Trump tax cuts, which sounds good in theory if you’re concerned about corporate breaks, it also impacts all classes of folks that were given a tax cut. I would argue it was by design to make removing it painful for all so maybe folks would argue it should say but, regardless, the change would yet again decrease income for the average Joe.
Those that say they won’t happen cannot be serious. I say daily that I cannot believe my eyes, there really is no lower bounds when being governed by children. Adults left the room (or country) long ago.
Also on Mish’s point re: earned income tax for folks with no children. That’s already policy, sounds like they would expand it and make permanent, aka back door direct welfare. At least it requires WORKING to obtain.
All due to non-stop spending beyond means and improperly measuring true inflation thus allowing governments to fund it below true interest levels and now we suffer massive inflation and debt. I see no way out without pain. I’ll accept it as long as those that benefitted more along the way suffer commensurate levels of pain, I just wish it didn’t have to happen.
MPO, the archaic technical term for this is circle jerk.
WEF: Imagine it is 2030, you own nothing and are happy.
Do the bugs taste better?
9 of the 10 wealthiest counties vote democrat.
Like Ed Koch said “The people have spoken and they must be punished.”
Maybe the rich thought all of this Tax The Rich stuff in the dem party qas just a schtick but if this passes they are not going to like it
The answer to all of this is NO. Absolutely, 100% no & never. The dims are completely out of their minds.
Wait, what’s the new tax rate on Graft, Bribery, Kickbacks, and Other Corruption going to be?
Still zero for the big guy
Biden’s second term will put America at a point of no return. These lunatics already destroyed much of this country in less than 4 yrs.
Really? My property value is up, my portfolio is up, the price of an EV is down, I received 6k as a tax refund, my year over year increase in Obama Care health insurance was $10/month. Is it really as bad as you say?
I am sure your are joking – if not show us!
Is your portfolio up over 18% (because that is how much each dollar in it has lost in purchasing power)? If not, then it is down
Equality (aka poverty) for all!
Of course Asians make more than Whites and have for at least 50 years but it’s not like Biden and Yellen want to recognize what Daniel Patrick Moynihan and later Dan Quayle pointed out. Two parent families are a big reason why kids succeed. Asians have it more than Whites and Whites have it more than blacks.
The proposal would increase the tax rate on corporate stock repurchases to 4 percent.
They should make it 5%. Stock buybacks are a scam.
Why? It’s their property and shareholders benefit from the tax efficiency as opposed to increasing dividends which are taxable.
Maybe they should invest that money in new products or efficiencies, pay higher wages, or charge customers less to increase the company’s market share.
In other words, they should (a) do things to enhance the strength of the company, not (b) further increase the wealth of the already incredibly wealthy investors and the C-suite in a way that hobbles the company, long term. Most companies do buy backs with debt issuance.
What if the company lacks good options to do those things? Should they simply misallocate money?
Let’s compromise then: no buybacks until every penny of debt issued by the company has been called/paid with cash and cash equivalents, and any buybacks are then purchased through remaining cash and cash equivalents only. Deal?
PS No shady dealings with counterparties, shell companies, swaps, etc. in the audit trail to “technically” meet the requirements.
A lot of the debt is done for tax purposes. Apple for example recently had 100 billion in cash and yet was borrowing money. The reason was they didn’t want to bring the cash into the US and get taxed on it. So they borrowed and paid interest (and took a tax deduction to boot). This was a smart move by Apple. Under your strict rules they couldn’t do cash buybacks unless they were willing to pay of that debt which they didn’t want to do. It’s not quite as black and white as you make it seem in the corporate tax world especially when it comes to international companies.
@TexasTim65,
Who do you think wrote those tax laws then handed them to Congress to be moved through the legislative process?
It’s one big scam, Tim, and it’s my guess you are sitting in a position somewhere that makes you well aware of that.