WASHINGTON (AP) – United States (US) President Joe Biden (AP pic below) intends to propose a minimum tax of 20 per cent on households worth over USD100 million and cut projected budget deficits by over USD1 trillion over the next decade, according to a fact sheet released last Saturday by the White House budget office.
The introduction of the minimum tax on the wealthiest Americans would represent a significant reorienting of the tax code. It would apply to the top 0.01 per cent of households with half of the expected revenue coming from households worth USD1 billion or more. The minimum tax would effectively prevent the wealthiest sliver of America from paying lower rates than families who think of themselves as middle class, while helping to generate revenues to fuel Biden’s domestic ambitions and keep the deficit in check relative to the US economy.
In his proposal, the lower deficits also reflect the economy’s resurgence as the US emerges from the pandemic. It’s a sign that the government’s balance sheet will improve after a historic burst of spending to combat the coronavirus.
The fading of the pandemic and the growth has enabled the deficit to fall from USD3.1 trillion in fiscal 2020 to USD2.8 trillion last year and a projected USD1.4 trillion this year. That deficit spending paid off in the form of the economy expanding at a 5.7-per-cent pace last year, the strongest growth since 1984. But inflation at a 40-year high also accompanied those robust gains as high prices have weighed on Biden’s popularity.