President Biden’s Proposed Budget for 2023 Fiscal Year Includes Largest Tax Increase in History

by Taylor Cunningham
(Photo by Alex Wong/Getty Images)

President Joe Biden on Monday proposed a $2.5 trillion tax increase for the 2023 fiscal year, which starts this October. The plan includes a so-called billionaire tax and another hike that would target married filers who make more than $450,000.

Quick Facts

  • President Biden is looking to cut the federal deficit by imposing a tax increase on the country’s top earners.
  • All people in the top 0.1% would pay a minimum 20% income tax on income and unrealized gains.
  • Biden also hopes to increase the top tax bracket to 39.6% starting on Jan. 1.

Biden Plans to Introduce a Tax Increase on the 700 US Billionaires

Biden’s plan would set a $5.8 trillion budget for next year and would cut federal deficits by raising taxes for the country’s wealthiest citizens. If passed, the increase would be the largest in U.S. history.

The majority of the burden would fall on the top 0.01% of Americans. Billionaires and top-grossing companies would see a modified wealth and global minimum tax as well as a steeper corporate rate.

During a speech, Biden said the federal budget “makes prudent investment and economic growth, a more equitable economy, while making sure corporations and the very wealthy pay their fair share.”

As outlined on Monday, the proposal includes a minimum 20% income tax on households worth $100 million or more. The return would equal an extra $361 billion in revenue over the next decade, with over half would come from America’s 700 billionaires.

The taxable income would include the billionaires’ full incomes or a combination of income and whatever they made in unrealized gains. If the affected households aren’t paying 20%, they will owe a “top-up payment” to make up the difference.

Unrealized gains include valuable assets such as stocks and property, which aren’t currently taxable unless the owner sells.

“This new minimum tax will eliminate the ability for the unrealized income of ultra-high-net-worth households to go untaxed for decades or generations,” the White House said.

Under the Biden Proposal, Married Filers Making More Than $450,000 Will Also See a Tax Increase

President Biden is also looking to give a tax increase to households falling into the highest tax bracket. Instead of paying 37%, they would pay 39.6%.

The people who fall into the bracket are married couples making $450,000 who file jointly, heads of households bringing on $425,000, single filers making over $400,000, and married people filing separately who make $225,000.

If passed, the rate hike would go into effect on January 1st, 2023. And those thresholds could change due to inflation. Though, it may be hard for Biden to get Congress on board. Last year, he proposed a similar plan that failed to pass.

“There weren’t enough lawmakers in favor of raising the rate to 39.6% last year for it to make the cut in the House-passed reconciliation bill,” said senior economist and research manager at the Tax Foundation, Erica York, CNBC reports. “And I don’t see anything that has changed to make it easier in an election year.”