Buried long into an interminable New York Times thumbsucker about intergenerational wealth transfer and racial inequality comes this sentence: "The president's latest budget proposes largely offsetting spending on social programs with revenue from a minimum 25 percent annual wealth tax on households with a net worth of $100 million or more."
I follow this stuff pretty closely and somehow I missed Biden proposing a "25 percent annual wealth tax." As is often the case with the New York Times, it's hard to know whether they are inaccurately reporting the proposal, or whether they are accurately reporting a proposal that is so extreme it has little chance of getting enacted, and thus hasn't attracted much attention. But the editor in me yelled, "forget about the intergenerational wealth transfer and racial inequality, write about the 25 percent annual wealth tax." I'm not a math genius, but a 25 percent annual wealth tax, on the face of it, applied to $100 million looks like this: Year one: The government takes $25 million, leaving you with $75 million. Year two: The government takes $18.75 million, leaving you with $56.25 million. Year three: The government takes $14.06 million, leaving you with $42.19 million. Year four: The government takes $10.55 million, leaving you with $31.64 million. Year five: The government takes $7.91 million, leaving you with $23.73 million. So what's billed as a 25 percent tax winds up with the government taxing away more than three quarters of what a person owns.
No wonder that even politicians to the left of Biden, like Senator Elizabeth Warren and Senator Bernie Sanders, who have proposed wealth taxes have set the rates at two percent or at staggered rates between one and eight percent. A 25 percent annual wealth tax is confiscatory.
So does the Times have it mistaken? It looks like what the Times is referring to could be what the White House calls a "billionaire minimum income tax" that would redefine "income" to include "unrealized appreciation" for "those worth over $100 million." The White House announced it as a 20 percent tax but perhaps the Times thinks that the 3.8 percent ObamaCare tax (which Biden wants to raise to 5 percent) would apply on top of that 20 percent rate, for a total of 25 percent?
Anyway, there's recent legislation in the House along these lines with 55 cosponsors, all Democrats, including such bright lights as Rashida Tlaib, Jerrold Nadler, Ilhan Omar, Alexandra Ocasio-Cortez, and James McGovern. It always seems like it's not going to happen until it actually happens, and then the Republicans and the Democratic "moderates" will want credit for "victory" for having negotiated the tax rate down to a mere fraction of the original proposal.