Biden stated Wednesday that he is tired of corporations and the wealthy not paying their fair share of taxes.
The White House economists then released a report showing how little the richest earn.
The report revealed that the average income tax paid by America's 400 richest families is 8.2%.
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President Joe Biden is aiming to raise taxes on America's wealthiest families and largest corporations in order to offset the rising cost of ambitious infrastructure spending.
A White House report has provided evidence to support his frustrations. Greg Leiserson, an economist, and Danny Yagan posted a blog post stating that they found that the 400 richest families in America pay 8.2% in income tax each year. This is a significant drop from the average American income tax rate of 14.3%, as reported by The New York Times. Yagan and Leiserson said the lower rate was due to their consideration of income other than salaries. They also considered assets such as stocks, which can accrue capital gains and are often not taxed.
Biden tweeted Wednesday night: "I'm sick of the super-wealthy, and giant corporations not paying my fair share in tax." It's high time it changed.
His tax proposals amount to an undoing of Trump-era tax reductions. Recently, House Democrats presented a proposal to finance their infrastructure plans. It would tax capital gains. It would generate $2.9 trillion, they estimated. Biden stated that while hikes would equalize the playing field, but "the superwealthy will still be able to own their three homes."
The federal income tax rate of 10% applies to the lowest bracket of the US tax bracket, which is those who have taxable incomes between $0 and $9,950 in 2021. The White House reported on Americans who made between $2.1 billion and $160 billion in 2018. The White House used data from the IRS and the Survey of Consumer Finances to calculate the average rate of 8.2%.
The low tax rate of the richest Americans comes from the fact that many of them have a large portion of their income coming from assets and not salaries, which is not the case for most taxpayers. Center on Budget and Policy Priorities, a left-leaning organization, found that wealthy households have a significant tax advantage in that much of their income is not included on their annual tax returns. This is because the tax code does not consider it to be 'taxable income'.
According to the CBPP report capital-gains taxes, which tax the sale of assets such as stocks, are "effectively voluntary." You could make a lot of money from stocks, but these gains will not be taxed unless they are sold. Capital gains are also subject to tax at a lower rate than regular income with a maximum rate of 20%.
The most recent House Democrats proposal would see the capital-gains tax rate rise to 25%, which is far less than Biden's original proposal that nearly doubled the rate to 43.4%. The Biden proposal was intended to make capital gains more comparable with the top income tax rate of 37%.
The White House's methodology also aligns with Sen. Elizabeth Warren’s outright wealth tax. This would levy a 2 percent tax on households with $50 million to $1billion net worth, and a 3 percent tax on households with more than $1 billion net worth. It would also include gains from assets.
