We were going to see what we were going to see… and we saw nothing. As every time it gives itself a Democratic (left) president, America is unable to reduce the abyss of inequalities which is widening, while the fortune of American billionaires today represents 19% of the national GDP, against 9% ten years ago and 2% in 1982.
It is not a surprise. It’s a disappointment. President Biden, demanding that the super-rich pay “their fair share”, presented an ambitious proposal in March. Its “Billionaire Tax” plans to tax households with assets of more than 100 million dollars (the richest 0.01%) of a minimum of 20% on their income, and, above all, on unrealized capital gains of their shares, financial and real estate assets. Because the wealthiest, Jeff Bezos, Mark Zuckerberg, Elon Musk, are large shareholders of listed companies that do not distribute dividends, pay themselves a low salary and do not sell their shares, which limits their taxable income. The measure is supposed to bring in 360 billion dollars over ten years while the 700 American billionaires have seen their fortunes increase by 1,000 billion in 2021, according to the White House.
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The Congress Dam
The “Billionaire Tax” is applauded by public opinion. One imagines the average citizen horrified at any idea of wealth tax, sacrilege in the land of the American dream. But according to a Data for Progress poll, 59% of voters support this proposal, only 31% oppose it. Even among Republican voters (right), approval prevails, at 46% against 43%. Americans are all the more impatient after learning from the ProPublica media site in June 2021 that the 25 richest Americans paid an average of only 3.4% in federal income tax, compared to 14 % for the middle classes! And yet, this quasi-ISF made in the USA has no chance of being adopted as it is by Congress.
The president made a previous attempt, in the spring of 2021: he wanted to double the capital gains and real estate tax for households earning more than $1 million a year (from 20% to 39.6%), and raising the maximum income tax rate (from 37% to 39.6%). The ace! While Biden only has a majority vote in the Senate, a few dissident Democrats have scuppered this plan, which was to bring in $1.5 trillion over ten years.
It’s always the same scenario. On the right, Republicans remain united around the idea of lowering taxes, as with Donald Trump’s tax reform in 2017, yet unpopular in the eyes of a majority of Americans. On the left, on the other hand, there are always a few elected officials who are reluctant to tax the wealthiest more.
Moreover, the Democratic presidents have shown little eagerness to restore the progressiveness of the tax system undermined by Ronald Reagan. “Nobody likes tax increases,” Bill Clinton said in 1993 when he planned to raise the top income tax rate for the wealthy. And, in 2012, Barack Obama almost apologized for his tax hikes: “It’s not like I like paying taxes. But we have this huge deficit.”
The weight of lobbies
Times have since changed, for good… and for bad. Inequalities have reached such a disproportionate level (the wealth of the wealthiest 0.1% is equal to that of 90% of the population) that taxing the rich has become a promising electoral theme. As proof, the evolution of Joe Biden, who took up the idea of an ISF when in 1986 he had voted in favor of Reagan’s tax reform. On the other hand, the polarization of political life has worsened, to the point of torpedoing any hint of reform. Another drift, more worrying: the weight, become crushing, of the lobbies. Unlike France, in the United States, since the Supreme Court relaxed the rules in 2014, any citizen or company can fund a politician’s campaign without limits. Many billionaires write massive checks to push a candidate… who will be indebted to them. A plutocratic operation that bodes ill for a fairer contribution from the super-rich in the future.
