The 2022 midterm elections are up ahead, and it looks like the trend of past elections will continue. In the past few midterms, we’ve seen the controlling party lose control of the legislative branch, and Joe Biden’s approval rate is a sign that the same thing will occur in November. Knowing this, Democrats are laser-focused on passing policy as their majority might cease to exist.
One major battleground is taxes, and Biden has been trying to create new proposals that Congress will agree on. His latest proposal is to place a minimum tax on households earning 100 million dollars or more. This would be a 20 percent tax on income and rising asset value, which includes unrealized gains. According to the White House, this will generate approximately 360 billion dollars in revenue over 10 years, with the largest chunk coming from the unrealized gains of many billionaires. Unrealized gains make up a substantial portion of net worth, especially with billionaires like Elon Musk, which makes this bill effective in collecting money from the rich. The legality might get a bit confusing with the 16th Amendment, but the administration has a plan to tackle that. To be frank, this faces a tough path to the President’s desk as there has been opposition to taxing unrealized gains in the past, but Democrat unification is the first thing that needs to be achieved. The revenue from this proposal could help fund some of Biden’s big spending plans and help reduce the deficit, but it could lead to a slowdown in the economy that the US might not be able to manage with the current crises in the world.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.