The $2 trillion, or 70%, increase in wealth among the nation's 740 wealthiest people could go untaxed, bolstering the case for President Biden's proposed Billionaires Income Tax.
A similar tax proposed by the Senate's Chief Tax Writer would generate up to $555 billion in savings for working-class families on healthcare, childcare, and other essential services.
On April 18, 2022, working families will once again pay their fair share of taxes, while billionaires will not. According to Forbes data analyzed by Americans for Tax Fairness, during the first two years of the pandemic, American billionaires' collective net worth increased by $2 trillion, or 70%, to a staggering $5 trillion (ATF). [All data can be found in the table below.] However, none of that wealth accumulation, which is the main source of billionaire income, will ever be taxed.
24 Month Wealth Growth
24 Month % Wealth Growth
Number of Billionaires
Between March 18, 2020, and April 5, 2022, the total number of billionaires in the United States increased from 614 to 741. The following are some of the wealthiest people in the world:
Elon Musk: The man behind Tesla and SpaceX saw his fortune increase by 11 times, or $266 billion, to $290 billion.
Jeff Bezos: After a $77 billion increase in wealth over the last two years, the man who founded Amazon is now worth nearly $190 billion.
Larry Page and Sergei Brin, co-founders of Google, have seen their fortunes rise by more than 133 percent, to $119 billion and $114 billion, respectively.
Billionaires frequently avoid paying federal income tax due to loopholes. According to IRS data, Elon Musk, Jeff Bezos, and other top billionaires paid no federal income tax in several recent years, according to a ProPublica investigation last year. When the growth in their wealth is counted as income, the top 25 billionaires paid only a 3.4 percent tax rate between 2014 and 2018. When the increased value of their corporate stock was counted as income, the nation's 400 wealthiest billionaires paid a tax rate of only 8.2 percent, according to White House economists. In 2019, the average federal income tax rate for all taxpayers was 13.3%.
Billionaires and other extremely wealthy people make the majority of their money from the growth in the value of their investments, rather than from a job or a small business. However, unless the investments are sold, that type of income is never taxed. The very wealthy, on the other hand, do not need to sell their assets to convert their growing wealth into cash income; instead, they use their growing fortunes to secure special low-interest loans that allow them to live lavishly without paying income taxes. Furthermore, such asset-based income growth can be passed down to the next generation tax-free.
A billionaires income tax, as proposed by President Joe Biden recently and by Sen. Ron Wyden (D-OR), the Senate's chief tax writer last year, could close this massive tax loophole. A side-by-side comparison of the two proposals can be found here.
Both proposals would tax the superrich's investment gains in the same way that workers' wages are taxed now. Requiring billionaires to pay a fairer share of the increase in the value of their assets would make the tax system more equitable while also generating revenue that would benefit the economy and provide more services and opportunities for millions of Americans.
“The failure to tax increases in billionaire wealth from skyrocketing corporate stock and other investments is the worst loophole in our loophole-ridden tax code. Workers pay tax on their income all year, every year," a,ccording to Frank Clemente, executive director of Americans for Tax Fairness, "simple justice demands that billionaires do the same. Congress should close this loophole as part of the legislation members are now negotiating to help families cope with rising prices and make major investments in clean energy, all paid for by more fairly taxing the rich and corporations. "
The Billionaire Minimum Income Tax proposed by Vice President Joe Biden would raise $360 billion over ten years solely from the richest 0.01 percent of Americans, each worth at least $100 million. Senator Wyden's proposed Billionaires Income Tax would raise $555 billion from about 700 billionaires over ten years.
The money raised from a billionaires' income tax could be used to help lower the costs of basic necessities like healthcare, childcare, education, and housing for America's working families, as well as make other critical public investments, such as in the fight against climate change. These are some of the investments and combinations of investments that could be funded by the President's $360 billion plan, according to cost estimates from the House-passed Build Back Better Act:
- Reduce childcare costs by $274 billion over six years and guarantee universal free preschool for all children ($109 billion).
- Paid family leave ($205 billion over ten years) and a larger Child Tax Credit ($159 billion for one year)
- Reduce housing ($151 billion) and eldercare ($150 billion) costs over ten years, and expand Medicare to cover hearing benefits ($37 billion)
Senator Wyden's $555 billion plan could cover the following expenses:
- Over a ten-year period, reduce the costs of healthcare ($400 billion) and housing ($151 billion).
- Increase the Child Tax Credit ($484 billion in four years)
- Make investments in clean energy ($555 billion over ten years)
The public is overwhelmingly in favor of a tax on billionaires' earnings: Senator Wyden's plan received 64 percent support in a recent national poll. (Biden's strategy was not put to the test in this poll.)
This billionaires' bonanza has played out against the backdrop of the COVID-19 pandemic, which has infected 80 million Americans and killed nearly one million. Many small businesses have closed, daily life has been disrupted, and the cost of everything from housing to gas has eaten into household incomes. Although prompt and ample federal action helped to mitigate the worst economic effects of COVID and hastened recovery, businesses and families will face new risks as many of these interventions come to an end soon.
As pandemic responses fade, millions of families could face steep increases in healthcare premiums or the loss of insurance coverage in the second half of this year:
- Medicaid Coverage: During the early stages of the pandemic, when millions of Americans lost their jobs and healthcare coverage, Congress passed the bipartisan Families First Coronavirus Response Act, which provided coverage to a much larger number of people. The federal government increased state matching funds and ensured that Medicaid enrollees would be covered indefinitely throughout the public health emergency, despite income fluctuations or other factors that would normally disqualify them. According to an Urban Institute study, as many as 13 million people could lose health coverage over the next 12 months once the public health emergency expires, which is expected to happen this year.
- Coverage under the Affordable Care Act (ACA): During COVID, Congress and the Biden Administration took steps to make private insurance more affordable by passing the American Rescue Plan, which provided enhanced premium assistance to help more people purchase ACA coverage. This resulted in a record-breaking number of people signing up for insurance marketplace plans this year. However, if Congress does not act, the enhanced premium assistance program, which saved individuals over $800 last year, will expire at the end of 2022. Millions of people across the country will be without insurance as a result of this.
- Closing the Coverage Gap in Medicaid: Medicaid, a low-income insurance program co-funded by the federal government and states, was greatly expanded under the Affordable Care Act. Washington induced states to participate in this reform by temporarily funding the entire expansion (the Supreme Court ruled it could not be required), with the ratio declining in recent years to a permanent 90-10 federal-state funding formula. Despite this, at the time of the pandemic's onset, a dozen states had not yet expanded their programs. This left millions of Americans in "the Medicaid gap," unable to afford even subsidized ACA coverage despite being ineligible for traditional Medicaid. COVID relief measures in 2020 and 2021 bridged the Medicaid gap temporarily.
Continuing to provide affordable healthcare to millions of working families in America would cost about $50 billion per year. Sen. Wyden's proposed tax on the nation's 700 or so wealthiest households could cover the cost.
"It’s time to get our priorities straight. No one in our country, no matter where they live or how much money they have, should lose healthcare because they can’t afford coverage while billionaires get richer and avoid paying any taxes toward supporting the economy," said Margarida Jorge, Executive Director of Health Care for America Now.
Citizen activists are urging their members of Congress to take a stand on raising taxes on billionaires, such as those proposed by President Biden and Senator Wyden, by enacting a billionaires income tax. Voters are asking members of Congress to support a resolution calling for billionaires to pay their fair share as Congress prepares to debate a package that includes some tax increases for the wealthy.
Proposals to create a billionaires income tax would mark a historic shift away from decades of proliferating tax breaks and wider loopholes for the wealthy, which have contributed to a widening wealth gap between the nation's wealthiest families and the rest of the population. The last major tax legislation passed by Congress, President Trump's Tax Cuts and Jobs Act (TCJA), provided $1.9 trillion in tax breaks primarily to the wealthy and corporations.
By fLEXI tEAM