President Joe Biden was elected by projecting a moderate image, rejecting proposals for a wealth tax from his primary campaign rivals, Senators Elizabeth Warren (D–Mass.) and Bernie Sanders (I–Vt.).
However, now that Biden has reached the White House, he refuses to abandon the notion, although it will fail to pass the Democrat-controlled Congress like many of his tax-and-spend proposals.
Biden initially proposed what I dubbed the “Biden-Wyden wealth tax” in October 2021, after Senate Finance Committee Chairman Ron Wyden (D–Ore.). It fizzled, in part because of the dynamic combo of Sens.
Joe Manchin (D–West Virginia) and Kyrsten Sinema (D–Ariz.) deserve credit for rescuing Biden from his party’s worst policy proposals. According to The Washington Post, even Speaker Nancy Pelosi (D–Calif.) privately dismissed the Biden-Wyden wealth tax as a PR ploy.
Like a sequel to a bad film, the president’s current budget includes a variant of the Biden-Wyden wealth tax. This time, the White House attempts to sell it using deceptive rhetoric.
According to the New York Times, a White House paper portrayed the tax, targeted at people with more than $100 million in assets, as “a prepayment of tax obligations these households would incur when they realize their profits.”
According to Politico, “illiquid taxpayers may choose to pay interest-free.” Numerous issues that plagued the original Biden-Wyden wealth tax persist in this updated form.
It may be unconstitutional. Its retroactive use is inconsistent with a fundamental concept of the rule of law. Its limited target population raises problems about the consent of the governed and taxes without representation.
There are practical concerns about the valuation of assets whose values shift significantly over time. We should be concentrating our efforts on reducing the burden of taxation and shrinking the size of government, not the reverse.
The money would be better spent by the wealthy individuals who own it than by lobbyist-influenced Washington politicians.
One may have some fun with the two notions on which Biden-Wyden II is said to be predicated—prepayment and “illiquid…may elect to pay later with interest.”
What if the remaining taxpayers used the same approach to the federal government because retribution is justice? I’d submit an invoice to the government for the future worth of all my Social Security and Medicare benefits.
They’ll ultimately owe it to me; therefore, now asking for the money is only “a prepayment of…obligations” that the government “will owe…later.”
Additionally, I’d like to know the worth of future defense expenditure and Social Security and Medicare spending that will benefit my children and maybe future grandkids. I would prefer that money from Washington immediately as a down payment.
If every taxpayer made this demand, the government would be unable to make the payment immediately. It would be “irregular.” The government would have to borrow money the same way it does now—by issuing bonds and repaying the money with interest later.
The government may also create money through the Federal Reserve’s magic, albeit when it does so in excess, as it has recently, it erodes the value of existing money.
On the surface, the disparity between the two requests for immediate payments of probable future responsibilities exposes the tax collector’s asymmetry with the taxpayer.
When a tax collector demands prompt payment, he has the state’s armed obligatory authority on his side. The tax collector has the authority to sue, establish a lien, and confiscate property.
If a taxpayer desired immediate payment of future Social Security or Medicare benefits rather than deferred payment, the taxpayer would be ridiculed out of town. And the taxpayer would be unable to extort the government.
However, there is one area in which taxpayers have greater influence than tax collectors. That occurs at the polling place.
If Biden is voted out of office, he may still have reason to be happy that the Biden-Wyden wealth tax was not established so that it required prompt prepayment to the IRS of future speaking fees and book royalties earned by former presidents.
Once the federal government endorses the concept of “prepayment of tax liabilities that these households will incur when they realize their earnings,” there is no knowing where that perilous reasoning will go.