Pun Salad

Faced with real economic pain, President Biden proposes to tax imaginary income.

Biden has had some very, very stupid ideas in his 50 years in public life. We won’t say that his latest “billionaire” tax proposal is the dumbest of them, but it’s on the top-ten list.

Biden’s proposed “Billionaire Minimum Income Tax” — which, of course, is not actually limited to billionaires — is an economically illiterate and very likely unconstitutional proposal that purports to make the very wealthy pay their “fair share,” in the conventional language of Democratic demagoguery. It would do so in part by taxing some high-income people on money they haven’t made yet, combining the worst features of the IRS with the worst features of Minority Report.

If you thought the White House was done devising bad economic policies, think again. First was the idea to pass a stimulus package that many economists agreed was too large and worsened inflation; then came the plan to shrink the domestic oil and gas industry; next, a push to remake and enlarge the welfare state that never had popular support and, mercifully, faltered in Congress; and now, tucked away in President Biden’s budget proposal, comes a provision for a de facto wealth tax. In some ways, this is the worst idea of them all, though it would be so hard to enforce that its damage would be limited, even if it passed.

Textbook economics argues that wealth taxes are the most distortionary and least efficient of all taxes. Governments need to raise revenue somehow, ideally via taxes that are relatively easy to collect and don’t alter behavior too much by, for example, discouraging people from working or investing. It follows that consumption taxes are efficient, since consumption (spending) is easy to observe, and people need to do it. Income taxes have become relatively easy to collect information on, since most employers need to share pay data with the IRS, and they don’t discourage work at low to moderate income levels. But it’s hard to observe wealth: the IRS does not collect information on it, many assets held by rich people are tricky to value (such as fine art), and the value of wealth can be volatile (consider the Bitcoin millionaire). Taxing wealth also encourages people to shift their assets abroad or into difficult-to-value assets, or simply to understate what their wealth is worth. Many European countries have given up taxing wealth, and those that do impose wealth taxes derive only a small share of revenue from them.

Yet now, as president, Biden has embraced a wealth tax of his own. In his latest budget plan, Biden proposed something the White House has dubbed the "Billionaire Minimum Income Tax," which applies to all income, realized and unrealized, for households worth more than $100 million. The Biden administration is framing this as a form of "prepayment" on future capital gains—which is to say it's a form of taxation on money that someone has not actually seen, based on the value of their holdings. It's not exactly the same as the wealth taxes proposed by Warren and Sanders, but it's designed around the same fundamental idea: the taxation of personal wealth, rather than of cash income, which often takes the form of difficult-to-value assets.

Most of the same criticisms that applied to the Warren and Sanders plans still apply: Biden's plan probably wouldn't raise nearly as much money as the administration assumes: Wealth taxes are exceptionally difficult and resource-intensive to administer, which is why most OECD countries that have implemented wealth taxes eventually dropped them. It's also quite likely to be unconstitutional. At minimum, if it passed, it would be tied up in court.

Hannah-Jones' prescriptive call for slavery reparations flows seamlessly from Desmond's argument, as does her own expanded historical narrative—most recently displayed in a lecture series for MasterClass in which she attempted to explain the causes of the 2008 financial crisis by faulting slavery. "The tendrils of [slavery] can still be seen in modern capitalism," she declared, where banking companies "were repackaging risky bonds and risky notes…in ways [that] none of us really understood." The causal mechanism connecting the two events remained imprecise, save for allusions to "risky slave bonds" and a redesignation of the cotton industry as "too big to fail."

Making what appears to be a muddled reference to the Panic of 1837, she confidently declared that "what happened in 1830 is what happened in 2008." The claimed connection aimed to prove that the "American capitalist system is defined today by the long legacy and shadow of slavery." This racist, brutal system "offers the least protections for workers of all races," she said, and it thus warrants a sweeping overhaul through the political instruments of the state. To this end, Hannah-Jones appends an expanded essay to The 1619 Project book, endorsing a Duke University study's call for a "vast social transformation produced by the adoption of bold national policies."

House Bill 1524 would create a state National Service Alumni Attraction and Retention Fund. 

The money would finance “grants to New Hampshire-based employers and institutions of higher education for the purpose of providing financial assistance, workforce development, and education to AmeriCorps alumni and returned Peace Corps volunteers” interested in pursuing post-graduate education or work in the state.

The plan differs from an existing program in Vermont in scope, but not concept.