According to a document obtained by CNBC, President Joe Biden is expected to propose a new minimum tax that will mostly target billionaires when he releases his 2023 budget.
The minimum tax rate on households worth more than $100 million would be 20%. Half of the revenue could come from those worth more than $1 billion.
The document said that the minimum tax would make sure that the wealthiest Americans don't pay a tax rate lower than teachers and firefighters.
According to the document, the proposed levy is expected to reduce the deficit by $360 billion in the next decade.
If a wealthy household is already paying 20% on their full income, they won't pay an additional tax under the proposal. If they pay less than 20%, they will owe a top-up payment to meet the new minimum.
The document stated that the new minimum tax will eliminate the ability for ultra-high-net-worth households to go untaxed for decades or generations.
Biden is expected to release a new tax proposal on Monday. According to a fact sheet released by the White House on Saturday, his new spending plan would cut the deficit by over a trillion dollars over the next decade.
Congress will have to make a decision on Biden's proposal. Senate Democrats proposed a billionaires tax last year, which would have taxed the capital gains of the wealthiest Americans. The measure did not move forward.
According to the Congressional Budget Office, the federal deficit decreased by $360 billion in the fiscal year that ended in 2020.
The swift economic recovery is a factor in lowering the deficit. The American Rescue Plan helped the economy grow 5.7% in 2021, according to the White House.
A stronger economy will mean higher incomes for households and businesses. The government is expected to collect more than $300 billion in additional revenues this year because of this, according to the fact sheet.
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