Biden Pushes Billionaire Tax, Quadrupling Stock Buyback Levy in SOTU

In his second State of the Union On February 7, President Joe Biden called billionaires, corporations and others to address the nation. “pay their fair share,” repeating the administration’s concept of “reward work, not just wealth.”  

President Obama proposed that a minimum tax be imposed on billionaires, and that the stock buyback tax be quadrupled.  

“Let’s finish the job. Reward work, not just wealth. Pass my proposal for a billionaire minimum tax,” He said. “Because no billionaire should pay a lower tax rate than a school teacher or a firefighter.”  

A September 2021 Report The average federal income tax rate for billionaires was 8.2 percent, according to the Office of Management and Budget and Council of Economic Advisers. This is based on data from the Office of Management and Budget and Council of Economic Advisers.

Official details surrounding the president’s billionaire minimum tax have not been revealed. However, President Biden had previously suggested this levy in his 2023 federal budgetThe tax rate for households that have a net worth exceeding $100 million is at least 20%.  

The public policy proposal failed to make its way through Congress last year, and experts say that it is unlikely to happen with a Republican-controlled House.  

Senate Democrats championed a similar legislation in October 2021. billionaire tax—the Billionaires Income Tax—to help fund spending plans. But there were disagreements within the party, including among progressive-leaning Democrats, over the bill’s mechanisms.  

In late 2021, Treasury Secretary Janet Yellen spearheaded an international initiative to establish a global minimum corporate tax of 15 percent. More than 130 nations agreed to a general framework for the tax proposal, but there have been delays in implementation on crucial details, resulting in a postponement of the full agreement until later this year.

“I’m a capitalist. But just pay your fair share,” the president said in Tuesday’s address.

Taxing Stock Buybacks  

He also called it “outrageous” that oil and gas companies posted $200 billion in profits.  

“They invested too little of that profit to increase domestic production and keep gas prices down,” Biden said. “Instead, they used those record profits to buy back their own stock, rewarding their CEOs and shareholders.”  

The president recommended quadrupling the tax on corporate stock buybacks “to encourage long-term investments instead” to 4 percent.  

“They will still make a considerable profit,” he added. “Let’s finish the job and close the loopholes that allow the very wealthy to avoid paying their taxes.”  

As part of the Inflation Reduction Act, the federal government introduced a 1 percent excise tax on corporations that repurchased more than $1 million of stock over the course of a tax year. Market experts contend that this levy did not dissuade corporations from engaging in this activity, as there was a buyback frenzy last year.  

Although the president called out energy companies for their profits and buybacks, Apple topped the list of stock buybacks in 2022: $90 billion.   

Companies will buy back shares if they think the investors have discounted their stocks too immensely or bolster their financial ratios. Businesses initiating buybacks might also think that there are too few investment opportunities.  

Like the billionaire wealth tax, experts do not think the president would have enough support in the GOP-controlled House. 

Overall, Biden asserted that “our present tax system is simply unfair” because large corporations are taking advantage of the tax code. And, according to the president, these companies are also “taking advantage of you, the American consumer.”

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