President Joe Biden had taken a shine last fall to a Senate proposal that would raise hundreds of millions of dollars for his sweeping economic agenda through a tax on the mega rich. So had many of his top aides, who had pushed for such a tax since the beginning of his administration. Senate Democrats and their fragile majority seemed on board — even the holdouts, Sens. Kyrsten Sinema (D-Ariz.) and Joe Manchin (D-W.V.), in their own enigmatic ways. So the White House went to work on a tax that would target the earnings of the richest Americans — one that anticipated the criticisms of a noisy class of economists who had poured cold water on the idea before. On Monday, Biden unveiled the plan as part of the White House’s annual budget.
It took mere hours for Manchin to rain on the president’s parade. “There are other ways for people to pay their fair share, and I think everyone should pay,” Manchin told Bloomberg Monday afternoon. He deemed the proposed tax a “tough one” and dismissed it as an existential quandary, questioning how one could be taxed “on things you don’t have.”
The president and his party have never been more serious about forcing the titans of America’s new Gilded Age to pay their fair share. Biden’s proposal comes after more than a year of his administration shying away from the idea that had originated with and had been championed by his party’s left flank. As other options to raise revenue for Biden’s ambitions have fallen flat among Senate Democrats, this idea has been resurrected once again.
Democrats had reason to believe they could win over Manchin, who privately told the White House in late December that he would back some version of a tax on billionaires, the Washington Post reported. But while Manchin frequently says he’s open to some version of a Democratic proposal, he’s almost never open to the version that’s on the table, nor is he willing to propose a version of his own.
Biden’s proposal would force households with net worths greater than $100 million to pay a 20 percent minimum tax rate on any assets, such as stocks, that have increased in value but have not yet been sold. It’s intended to close a loophole that currently allows the ultra-wealthy to pay taxes at a rate far lower than their fellow poorer taxpayers. The White House asserts that the tax would raise $360 billion over a decade from the wealthiest 20,000 households in the country.
Targeting the megarich through the tax code has only recently migrated from the progressive fringes into the president’s agenda. Sen. Elizabeth Warren (D-Mass.) opened her presidential bid with a “two-cent” wealth tax, under which households worth more than $50 million would pay two percent on every dollar of their net worth above that amount. (For households worth more than $1 billion, that rate would have risen to three percent.) Her vision drew criticism from economists who cautioned that such a tax would be difficult to enforce — not to mention billionaires, who didn’t want to pay more. “I still have my ‘Billionaires’ Tears’ mug from my campaign,” Warren says. “The drink is sweet.” A majority of Americans agree with her: Poll after poll has found that taxing the likes of Jeff Bezos and Elon Musk spark joy for voters in both parties.
As talks over how to pay for Biden’s economic agenda stagnated in the Senate last fall, Sen. Ron Wyden (D-Ore.) floated his own billionaires’ tax that, like Biden’s, would have annually taxed financial gains on all of a household’s tradable assets, even if they haven’t been sold. Momentum for the measure faltered when Sen. Joe Manchin (D-W.V.) deemed such a tax, which would have applied to just .000002 percent of taxpayers, as “divisive.” House Democrats did not include a tax on the ultrarich when they passed their version of the bill last November.
The new White House proposal has won over both Warren and Wyden. “I would have gone a bit further, but I like his proposal very much,” Warren says. “I’m very happy to see them focus on those who are the wealthiest.” Wyden says that he and Biden are “clearly rowing in the same direction” with their proposals, and, as chair of the Senate Finance committee, is “all in” to giving the billionaires’ tax its best shot at becoming law, whether something more like his proposal or what Biden has prescribed. Wyden says he plans to bring it up in his committee soon as its members consider revenue raising options for whatever aspects of their parties’ now scaled-back ambitions they plan to resurrect in the coming weeks. “I don’t think you’ll find anyone saying billionaires should pay little or nothing in taxes,” Wyden says.
Except Manchin, at least for the time being.
“I’m not going to speak for my colleagues,” Wyden says. when I asked him how he might plan to bring the inscrutable West Virginian along. There’s futility in asking such a question, anyways, since Manchin is as keen on sticking to policy decisions as Lucy is on holding the football for Charlie Brown. But Manchin has maintained he would like to see the wealthy and corporations pay their fair share. It’s up to the White House, Wyden, and their Democratic colleagues to figure out what that will be.