President Biden on Monday released his proposal for what some critics have dubbed the "Don't Create Wealth" tax. The new plan, unofficially called the "Billionaire Minimum Income Tax," would levy a wealth tax on America's richest families. The tax would apply to households worth more than $100 million, and would require those households to pay a minimum of 20% on any income, or any perceived potential income from unrealized gains on assets that have yet to be sold.
Yes, the Federal Government is proposing a tax on unrealized income. They will continue to try anything- other than decreasing the amount of money they spend each year.
The White House is projecting the "Don't Create Wealth" tax will raise $36 billion per year (or roughly 49 hours worth of Federal Government expenses each year).
At a press conference on Monday, Biden made the case for his new tax plan:
"Now, I’m a capitalist, but just — I want — if you make a billion bucks, great. Just pay your fair share. Pay a little bit. A firefighter and a teacher pay more than double — double the tax rate that a billionaire pays. That’s not right. That’s not fair. And my budget contains a “Billionaire Minimum Tax” because of that. A 20 percent minimum tax that applies only to the top one-hundredth of 1 percent. One-hundredth of 1 percent of the Americans will pay this tax. The Billionaire Minimum Tax is fair, and it raises $360 billion that can be used to lower costs for families and cut the deficit."
Why this plan will discourage wealth creation
The government is notoriously bad at investing. Don't believe me? They've taxed and spent over $50 trillion (easily) since the creation of the income tax, and are currently $30 trillion in debt. Contrast that with an innovator like Elon Musk, who split his last remaining $30 million between Tesla and SpaceX in 2008, only to see them worth over $1 trillion combined just 14 years later.
To be clear, this plan will discourage wealth creation because it will remove money from the direction of people like Elon Musk, Jeff Bezos, and others, only to place it under the direction of people like Bernie Sanders, and Joe Biden. Given $1 billion to invest as they see fit, who do you think will create more value for the economy?
This plan will severely damage retirement for the average person
The ultra-wealthy are not sitting on piles of cash. They have pieces of paper denoting their ownership of specific companies. Those pieces of paper become more valuable as the companies they are tied to become more valuable.
To pay this tax, the wealth creators in our society will have to sell portions of their investments, similar to what Musk had to do at the beginning of the year to pay his $11 billion tax bill. The flood of supply due to Musk's selling created massive downward pressure on Tesla's stock price, leading to at least a 15% decline in the company's value that can be directly tied to Musk selling shares to pay his taxes. Now take that one example and apply it to the entire US Stock Market- every year.
The ramifications of this constant downward pressure on prices will affect everyone, especially those making less than $400k per year, who Biden claims will never have to pay for one of his tax plans.