“Lies, Damned Lies, and Statistics”: President Biden Makes Bogus Billionaire Tax Claim

President Joe Biden this weekend proved the truth to the old adage that there are “lies, damned lies, and statistics.” Biden is again arguing that the wealthy do not pay their fair share of taxes.  However, on Saturday, he made this whopper of a claim: “You know the average tax billionaires pay? Three percent. No billionaire should be paying a lower tax than somebody working as a schoolteacher or a firefighter.” There is no indication where that figure came from, but prior low figures have been based on a highly dubious method of counting unrealized gains as income — a highly controversial proposal for a new massive tax increase.

Politicians have long turned to the “Eat the rich!” battle cry when things are not working out politically or economically. When struggling in the 2020 Democratic presidential primaries, Sen. Elizabeth Warren (D-Mass.) pledged a wealth taxdeclaring that she was coming after “the diamonds, the yachts, and the Rembrandts too.” Then-New York City Mayor Bill DeBlasio, another Democratic contender at the time, was barely registering in the polls when he promised that “we will tax the hell out of the wealthy.”

With the start of the election season, we will now again hear the mantra that the wealthy do not pay their fair share in the United States. Many have challenged that popular claim. More than 40% of households pay no federal taxes at all. The top 1% pay forty percent of tax revenues. The top 25% of earners paid roughly 89% of all income taxes in 2020.

On the other side, some will acknowledge this is “technically true,” but they insist that this does not include such things as sales taxes and ignores the huge disparity in the proportion of income earned.

We can have that debate in good faith in the coming election. However, President Biden’s latest statistic is truly beyond the pale even for politics. Previously, the White House released an 8% claim, which was also dubious. This is the first time many of us have seen the three precent claim.

However, the earlier claim did show how it was created and how the President conceals the rather creative measures used to mislead the public.

Last month, the White House issued a fact sheet called “The Biden Economic Plan Is Working,” which used unrealized gains – a potential profit on an unsold asset – as income to lower the estimate on how much billionaires pay. It then declared to the shock of many that “in a typical year, billionaires pay an average tax rate of just 8%.”

Now this may come as a surprise but I am no billionaire. I have no expectation to be a billionaire. Some of my best friends are NOT billionaires. However, if the President is going to push for higher taxes, he owes a modicum of honesty to the voters in making his case.

The current estimate of some tax experts is that the highest income earners pay an average in the mid 20s.  Ironically, if true, that is where Biden says it should be.

While that figure can be debated, the inclusion of unearned income is more than creative, it is downright dishonest. Some of us have raised legal and practical objections to the proposal to include unrealized gains in tax bills.

Income tax focuses on actual income or gains acquired by citizens in any given year. That includes “capital gains” when you sell an asset for more than its original purchase price. It is “realized” when you sell it.

Democrats now are seeking to tax “unrealized gains,” even though an asset has not been sold and could go down in value. It is a more sophisticated version of Sen. Elizabeth Warren’s wealth tax, but it is arguably unconstitutional.

The Biden White House insists this is merely “a prepayment of tax obligations these households will owe when they later realize their gains. This approach means that the very wealthiest Americans pay taxes as they go, just like everyone else, and eliminates the inefficient sheltering of income for decades or generations.” Framing the tax of assets as a pre-payment still leaves it a tax on current wealth rather than income.

There is also the daunting logistical task of valuation and why some assets may be counted over other assets.

The same is true about a home. A family house likely will grow in value, and that value can be captured as a property tax by states. Yet the federal government cannot also take that value as a “prepayment of tax obligations” on an asset that might go down in value or not be sold for decades.

The targeting of billionaires is a brilliant way to get the public to accept a new type of tax. Once allowed, though, it can then be used on any asset and against any tax bracket to tax “unrealized gains.” If history shows anything, it is that the government tends to operate like a gas in a closed space: Expand the space, and the gas will fill it evenly.

The three percent claim of President Biden is only the latest statistical sleight of hand on tax politics. However, if he is going to use the statistic, he will have to more than double it and then acknowledge that he is using a measure for taxable wealth that is not recognized under the United States tax code.

The claim seems to suggest that Biden’s flubbed line in 2019 may actually now be an official policy: “We choose truth over facts.”

58 thoughts on ““Lies, Damned Lies, and Statistics”: President Biden Makes Bogus Billionaire Tax Claim”

  1. Unrealized gains would be if you bought stock, which increased in value, but you have not sold it yet. It could continue to go up, or down. You would pay capital gains taxes when you do, actually sell it.

    Unrealized gains would be the government making you pay now for a possible profit you might eventually make. You would have to use your existing money to pay for potential future money.

    How would homeowners enjoy being taxed on the unrealized gains of their homes as they increase in value, but before they sell it?

    It is financial punishment on the potential for future profit. If passed, such a tax would absolutely demolish investment, including retirement accounts.

    Or, it could be used to fraudulently claim the rich are paying less taxes than they really do.

    Fair is subjective. The poor and some of the lower middle class either pay no taxes, or get money from the government, while they use schools, roads, and bridges they did not pay a dime for. Meanwhile, they claim our that they should take even more from those who keep the country running.

    This is the dictatorship of the majority. They could essentially take every dime, ultimately, of a minority who earns more. This is how a majority of voters raise taxes on other people far more often than they’re willing to raise taxes on themselves. Let someone else bear the burden.

    Envy of success has been the ruination of every socialist and communist country. It stymies success and innovation, while government officials become wealthy off of the money taken from the populace. Communist officials were found to have their own dedicated phone line and ordering system in which they lived the high life while everyone else waited in bread lines for stale government issued bread.

    Those who will not learn are doomed to repeat the mistakes of history. Biden does not strike me as a fast learner.

  2. Jonathan: Judging from the comments re your column there are a lot of billionaires on this blog–or they are paid to reflect the views of the wealthy. In other words, they are shills. Some on this blog think my contrary views are those of of “communism” and I am advocating “class warfare”. The usual accusations used to attack anyone who thinks the wealthy and corporations should pay their fair chare.

    As a general proposition the wealthy and corporations don’t violate the tax laws. That’s because, through the millions they spend every year on lobbyists, they basically write the tax laws. They don’t need to violate them to take advantage of the many loopholes to save billions in taxes. And corporations, in particular, argue that keeping their taxes low permits them to make investments that produce jobs. This myth has dominated the conversation for years over raising taxes on the wealthy and corporations. The reality is quite different. Investment decisions are not based on the tax code but on market realities. But even when they get tax windfalls from changes in the tax code, like happened in 2017, corporations use them as stockholder dividends or stock buybacks–not to expand production or hire more employees.

    One guy who does violate tax laws is the Trumpster. Some on this blog have short memories. Back in December two subsidiaries of the Trump Organization were found guilty in NY of tax fraud, falsifying business records and conspiracy. And Trump had been doing this since 2005! In an ironic twist the case was successfully brought by Manhattan DA Alvin Bragg–the same guy who is about to indict Trump over the Stormy Daniels affair. So while you argue the coming indictment is just a political prosecution I would just say: “Don’t count your chickens until they are hatched”!

    1. How much tax did the Biden crime family pay for the millions they got from China and other corrupt deals with other corrupt countries and governments. And how much taxes did Hunter pay for his sale from his 500k paintings to unknown buyers?
      I completely agree with this article and I’m no billionaire. I’ve been working my ass off as a single mother for 30 years. Have a small business and worked in corporate for some of that time. I also struggled and had 3 jobs at one difficult time in my life after divorce raising my young sons and one with special needs… to have most of my hard earned money taxed and watch my IRAs lose 40% since this horrible administration pretends to care about the middle /working class. While they all have 10 mansions and corvettes I could only dream of having in my garage . And I wouldn’t want to take any money from the government because I have a work ethic and pride. I would also clean my garage myself and probably know I had piles of classified documents illegally taken from my previous job .

    2. Did McIntyre even read the Prof’s column? Doesn’t sound like it. I recall this same discussion during the Obama years and I saw a response similar to Professor Turley’s. That is, the top one percent pays 40 percent of all tax while the bottom 40 pay nothing, So much for the constant whining of the Elizabeth Warren types, They really don’t know what they are talking about.

  3. The resident socialist complains that corporations “shift[ed] almost $1 trillion in global profits to off-shore tax havens.”

    In other words: How dare they protect money they earned from those who desire to loot it.

  4. Jonathan: A lot of people have complained that the wealthy don’t pay their fair share of taxes–not just during the election season. Bernie Sanders and Elizabeth Warren have been complaining for years about how the wealthy have used the tax code to avoid federal taxes. There is an interesting article in The Street (3/19/23) about Musk’s call for eliminating tax schemes for millionaires and billionaires. Although he is opposed to Biden’s tax proposals, Musk thinks the Granter Retained Annuity Trusts (GRATS) should be eliminated. GRATS are a irrevocable financial instrument for estate planning that minimizes taxes on large financial gifts to family members.

    In 1989 Leona Helmsly famously quipped “Only little people pay taxes”. That was true in 1989 and it’s true today. The 25 richest Americans paid $13.6 billion in taxes from 2014-2018–a true tax rate of 3.4% on $401 billion income. When it comes to corporations at least 55 paid no federal income tax. How did they do that? By shifting almost $1 trillion in global profits to off-shore tax havens. Maybe one way to solve this disparity is to tax US corporations on their worldwide profits–not just those earned in the US. Another problem with the tax code is that it does not tax earnings on stock–until that asset is sold. If you count “unrealized gains”, billionaires, who count stock as a lot of their wealth, you pay lower rates than school teachers.

    One of the greatest beneficiaries of the current tax code is Donald Trump. For years he fought to prevent the disclosure of his tax returns–for good reason. But last year the SC ruled the Trumpster had to turn over 6 yrs of his tax returns to Congress. And what do those tax returns show? Trump paid little or no federal tax during that time. A lot of what Trump was perfectly legal but many tax experts question the legitimacy of many of the losses he claimed. For example, in 2017 Trump claimed his helicopter business had $42,965 in income but he claimed the exact same amount in expenses–resulting in no tax. One tax expert says that claim was a “statistical impossibility”. In the same year Trump paid just $750 in federal taxes because of large carry-forward losses that he claimed in prior years. And he paid $0 in federal taxes in 2020. All this the result of the TCJA law Trump signed in 2017 that dramatically reduced tax rates for the wealthy. Trump was one of the primary beneficiaries the TCJA.

    Anyone who thinks the tax code is not filled with tax benefits for the wealthy needs a reality check. That’s why Boden’s proposed “wealth tax” makes perfect sense. “Death and taxes” only affects those of us in the middle. When the wealthy die they pass on their wealth to their heirs tax free! It’s nice to know you are not a billionaire–without any expectation of becoming one. Then why do you so closely identify with the interests of billionaires?

    1. “Bernie Sanders and Elizabeth Warren have been complaining for years about how the wealthy have used the tax code to avoid federal taxes.”

      They are the lawmakers. Why don’t they change the freakin laws?
      Because they all benefit from the way it is.
      Most of them are now filthy rich — from their decades as “public servants.”

      1. No, they are not the lawmakers. They have two votes out of 100 in one chamber of the legislature. They cannot change the laws without convincing at least 49 other senators, 218 representatives, and the president to go along with them. Thankfully they have thus far failed to do so. Long may they continue to fail. But you can’t blame them for that failure, and claim they don’t want to succeed.

    2. “One of the greatest beneficiaries of the current tax code is Donald Trump. For years he fought to prevent the disclosure of his tax returns–for good reason. ”

      Is Trump breaking the law? (You know, like the Biden money laundering operation?)
      He is filing his taxes as required by federal tax laws written by Congress!
      Why should Trump – or anyone – pay MORE than their “share” as required by law?
      If politicians think the tax code is unfair, they are the ones who need to change it! They are responsible for all the loopholes.
      If they changed it, they would lose their favorite ‘class warfare’ talking point. Plus all their own benefits they receive under current tax code.
      Put up or shut up, Democrats.

      1. “Jonathan: A lot of people have complained that the wealthy don’t pay their fair share”
        Yeah, it’s called communism, or “Protest for the Redistribution of Wealth to Be Shared Among All of Us!”

      2. What is wrong with the Current Tax Code ?

        The biggest problem is that so many of us who are NOT well off pay little or no taxes.

        That creates massive moral hazard.

        How about whether you are rich or poor, if you do not pay atleast 10,000 in income taxes then you do not get to vote in federal elections.

    3. When the Uber-wealthy pay little or no taxes, it is more likely the result of income recognition timing and not unfairness. Tax burden should be viewed over time (perhaps, a decade) rather than in a calendar year when a large cash loss can offset income

    4. While we’re at it Dennis — here’s a question for you….

      What New York law did Trump break to justify an indictment in Manhattan?
      We’ll wait.

    5. “The 25 richest Americans paid $13.6 billion in taxes from 2014-2018–a true tax rate of 3.4% on $401 billion income.”

      Will Dennis agree to a flat tax or a consumption tax? probably not.

      What does he want? He wants to tax the rich. What is his problem? He is impatient and doesn’t think in broad terms. Aside from not understanding how economies grow he doesn’t know the law. If all of those 25 died tomorrow the tax liability on their estates would amount to about $160 Billion dollars unless the money is donated to charity. Does Dennis wish to get rid of charity? Is not the 40% tax high enough for Dennis?

      Tell us the truth Dennis. You are jealous and lazy wanting others to do the work. You can’t stand it that you fall far behind.

    6. “The 25 richest Americans paid $13.6 billion in taxes from 2014-2018”

      That is way more than the benefit they received from government over those five years. So I would call it way more than their fair share, even if your income figure were valid, which it is not.

      The entire idea that it’s fair for a person’s taxes to be in proportion to his income is without foundation. Nothing else is priced in proportion to ones income, so why should government be? Yes, the rich benefit more from government, at least in some ways, so they should pay more. But their benefit doesn’t go up in proportion to their income, and at some point enough has to be enough. It’s NOT fair for someone to pay more for anything than it’s worth to them.

    7. As you say, Trump paid low taxes because he had massive losses carried forward. Are you really so dishonest as to claim there’s something wrong with that?! You’re not disputing that he did suffer those losses. So how would it be fair for him not to offset them against his income? Unless you’re proposing that he should have got a full refund in the year he incurred the losses, i.e. the treasury should have paid him, so there’d be nothing to carry forward. I’d be OK with that, but I don’t think that’s what you meant.

    8. Dennis – you say: “Another problem with the tax code is that it does not tax earnings on stock–until that asset is sold. If you count ‘unrealized gains’, billionaires, who count stock as a lot of their wealth, you pay lower rates than school teachers.” “Earnings” on stocks are called “dividends.” Those are taxed as income. Appreciation in market value is not taxed because it is not “income.” You are bemoaning the absence of a “wealth” tax which the USA has never had and can never have if we are to remain a free country. When the government can take our savings (liquid or in the form of investments) for no reason except that the government wants more money, the entire population will soon be reduced to the level of the medieval peasantry

    9. Fixating on corporate taxes is idiocy. Who do you think actually pays Corporate Taxes ?

      Clue – YOU ?

      Higher corporate taxes, just means higher prices on what you buy.

    10. Lots of people complain about stupid and erroneous things.

      Does that mean we should act to prevent problems that do not exist ?

      Cut Spending – RADICALLY.

      In the end all government spending is paid for eventually by reductions in what YOU can consume.
      It does not matter who the taxes are levied on – YOU will have less.

  5. The American Founders detested taxation without representation and, certainly, taxation to support an unconstitutional and woefully corrupt government.

    The only remaining question is when Americans will “…awaken a sleeping giant and fill him with a terrible resolve.”

    To wit,

    “But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

    – Declaration of Independence, 1776

  6. “57% of U.S. households paid no federal income tax last year as Covid took a toll, study says”

    – CNBC, 3/25/22

    Someone please cite the Constitution where any tax is required or determined to be “fair.”

    Exactly how “fair” is it for 57% of U.S. households to pay no federal income tax? It clearly isn’t.

    A ticket to Disneyland is $164 for each and every adult, “fairness” notwithstanding.

    A truly “fair” tax would compel every citizen, who lives in and derives a benefit from America, to send the government precisely the same amount per year.

    Article 1, Section 8, requires that taxation be limited to the amount necessary for funding ONLY DEBT, DEFENSE AND “GENERAL WELFARE,” AKA INFRASTRUCTURE, AKA ALL, OR THE WHOLE, WELL PROCEED – NOT A FEW OR SOME INDIVIDUALS, OR PARTICULAR GROUPS.

    The entire communist American welfare state is unconstitutional and grossly “unfair.”

    What the communists (liberals, progressives, socialists, democrats, RINOs, AINOs) mean by “fair” is:

    “From each according to his ability, to each according to his needs,” as DICTATED by Karl Marx.

  7. Just another deflection away from Trump, his lies and his second effort to start an insurrection. Turley claims: “but prior low figures have been based on a highly dubious method of counting unrealized gains as income — a highly controversial proposal for a new massive tax increase.”. Then, Turley accuses Biden of lying, even though the grounds for the figures cited by Biden were explained–unrealized gains, meaning that an asset hasn’t been sold, but it has gained in value. Biden didn’t make this up, as Turley implies. Basically, Turley doesn’t think this is a valid basis for taxation, but others disagree. Turley, there’s a difference between something that is disputed (or dubious for those who don’t agree) and/or something “controversial”, and something flat-out untrue, which would be something without a basis in fact. And, you do know the difference. Your entire piece is based on the illogical premise that if some people dispute something others disagree with, one of them is lying. Of course, as you know very well, the deplorables will seize on your claim that Biden is lying, and won’t understand or remember the shaky grounds for saying this, which is the message you are paid to deliver.

    1. Gigi – in the Mortgage Meltdown of 2008, real estate lost in many places 50 per cent of it’s market value. Under Biden’s proposal, would they not get a refund?

    2. Comradette Nutchachacha says, “Nothing matters but that we communists get our grubby hands on every last penny engendered by producers and hosts in order that I and my fellow leeches and thieves spend it on the incessantly caterwauling supplicants, dependents and parasites, the iniquity and unconstitutionally of that criminal enterprise notwithstanding.”

      Of course, the Israelite slaves were out of Egypt before the ink was dry on their release papers, but then, they enjoyed the capacity, acumen, resolve and gumption sufficient to the task.

    3. Whether unrealized (i.e. notional) gains should be taxed in the year they are notionally earned (and then refunded if they end up not being earned after all), is a matter of opinion. But the White House’s own figures say that based on unrealized gains they pay 8%. Biden’s new claim of 3% is not a matter of opinion but an outright lie, that he pulled out of his rear end. Which happens to be the same part of the anatomy where Trump pulled the claim that he was going to be arrested tomorrow.

  8. Biden was misunderstood. When he said “thats not true” he wasn’t speaking about the Hunter payoff he was describing everything he just said. Hunter was just a kicker.

Leave a Reply