Biden’s Tax Justice

José López Zamorano | La Red Hispana 
Photo Credit: La Red Hispana

The Oracle of Omaha, one of the most successful investors of all time and one of the richest men in the United States, Warren Buffet, shocked the conscience of the country when he declared that his secretary paid more taxes than he did, proportionally speaking.

Almost 10 years have passed since that famous declaration and its content continues to be substantially true. Billionaires in the United States have not only benefited from Trump-era tax cuts, but have a myriad of mechanisms to lower their real tax rate.

In recent years, the most progressive sector of the Democratic party, embodied in the figures of Elizabeth Warren, Bernie Sanders and Ron Wyden, has sought to correct this situation through a new tax scheme that guarantees a higher tax burden to the 1% of wealthier Americans.

Although President Biden initially distanced himself from those approaches during the 2020 presidential campaign, this week he unveiled an unprecedented tax plan to increase the tax burden of the wealthiest 1% of Americans, that is, those who have incomes of more than 100 million dollars a year.

His proposal, which is included in the fiscal year 2023 budget proposal and still needs to be approved by Congress, is that billionaires would pay a minimum income rate of 20%, and for the first time, “unrealized gains” would be taxed, meaning increases in your other assets such as stocks and securities that have increased in price, even if they haven’t been converted to cash.

Unlike other Democratic proposals, which were based on the idea of ​​taxing more wealth, some experts believe that the president’s proposal is more likely not to be challenged in Congress or the Supreme Court because it technically does not punish wealth, but charges a minimum effective rate for increased income.

The middle class of course has nothing to worry about. No American earning less than $400,000 a year would pay a single extra dollar in taxes, according to the presidential plan.

The concept of a policy of wealth distribution is highly appealing to the progressive sectors of the Democratic Party, which are traditionally very active in politics and whose support is crucial for the upcoming legislative elections in November, where the Democrats could lose control of the House of Representatives and the Senate, taking into account that the president’s popularity is at one of the lowest levels of his term.

Beyond if the presidential plan can be approved in an election year, the issue of distributive justice is a pending issue that cannot be postponed in the United States.

Not only is it a chronic condition, but it was aggravated as a result of the pandemic and disproportionately affected the most vulnerable, ethnic minorities and the poor, who, as always, pay the price for the inability of politicians to agree.