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 tax, declaring 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.”
There are two things that the Democrats will always tell you. The first is that “They are going to put you all back in chains” and the second is that the rich don’t pay any taxes. They understand that jealousy is a strong motivator and they use it while they sleep in their multimillion dollar homes. Here’s a tour of Joe’s lovely abodes. https://www.homesandgardens.com/news/joe-biden-house. You have to admire them because they’ve got the race and hate the rich hustle down to a “T”. You hear this from Joe in between his request to Jeeves to peel him another grape. Jeeves is a strange name for a man from China. Would that he be so concerned with his millionaire son who didn’t pay half a million in taxes on the money he received from China. Just when you think there may be an end to the grift you find that it just continues on.
TiT,
You forgot one: They will bring back ‘norms.’
Could be argued they did bring back corruption on a grand scale.
For a non billionaire, on $2,000,000 capital gains, the state and federal tax is $530,000. But a lousy $8,000 in rental property losses (weather damage) can’t be deducted? That’s pretty messed up.
A “modicum of truth”, OK the first joke of Monday. Remember we’re talking about Joe Biden. He would know truth if it kicked him in the butt.
JT, welcome to the non-billionaire club.
So isn’t “a prepayment of tax obligations ” just depriving our children of that tax revenue?
“Sen. Elizabeth Warren (D-Mass.) pledged a wealth tax, declaring that she was coming after ‘the diamonds, the yachts, and the Rembrandts too.’”
Government confiscation of property and wealth, redistributed to others.
Hasn’t that looter’s policy been implemented elsewhere? Isn’t there a name for that cannibalistic political philosophy?
Let the Democrats “fire all their guns” one-by-one. eventually They will run out of rounds
and the ‘Don’ will come out unscathed, in plenty of time for the 2024 Election.
If biden wants to tax gains on assets, then “Goodwill” should count as an asset. Biden owns plenty of “Goodwill” with China so let the tax man cometh.
Democrat Guppies … Eat-their-Young
“There is no indication where that figure came from” — it probably came from the same place all Biden’s “facts” come from — his arse.
The mainstream media will faithfully cover for their guy until the very end. It’s part of the required MSM Stalin disinformation oath they take over there. Mr. Sniffer Whiffer could claim that he was NASA Astronaut back in the 60’s when he was leading civil rights marches in Alabama and they would dutifully nod and cover up the story like good little obedient comrades. Thank you, Jonathan, for an excellent article.
See the one where he made the claim while a senior in highschool, while getting out of his fathers car he saw two well dressed men in front of his school kissing, is when he understood gay rights.
Think about that one for a moment.
This would of been in 60s. Two men, well dressed, kissing in public, in front of a high school.
Yeah, I dont buy it either.
The desperation of the prog/left is palpable in so many of their latest actions.
With the MSM behind his BS, there will be a large enough percentage of people buying into this BS.
Biden’s lies go unreported in MSM as they cover for him.
Since when did Mr Biden ever wholly speak the truth, once he says I got out of bed. He might also explain how special taxation on millionaires (and presumably billionaires) has been tried in other countries, like France and then were rescinded since the Millionaires and Billionaires left. All you would have to do is have one relatively advanced country not have special taxes on the super-rich and then that would be where they would go. I’m sure China would immediately establish a heaven for the wealthy. They are’t stupid you know (china or the wealthy) You know those Asians, they can do complex math whereas I’m pretty sure Democrats are dumber in math than even me:sarcasm you know.
California and New York are loosing millionaires and billionaires and suddenly are looking at serious tax deficits and consequences as a result. So much so that the California governor is seeking ways to keep taxing you once you leave.
I have a really unique suggestion, stop spending.
If we start counting unrealized gains as income during good years, we will need to count unrecognized losses in down years. This idea disproves itself.
Progressive clowns like to pick their story and then choose their “facts”. They should be ridiculed and laughed at. They should Never be taken taken seriously.
Republicans should call Biden’s bluff and vote to increase federal taxes on billionaires, a group dominated by Democrats who want no part of a tax increase. It would be entertaining to see the reaction of Big Tech and Wall Street.
A high percentage of Americans poor dont pay any taxes. The working class, pays INCOME tax. The Wealthy dont have “income” to tax.
That is the ignorance the left uses to tell their lies. I have $90k in rental income…That is not income. I’m a private contractor, so I pay ALL the FICA taxes quarterly (everyone pays ALL their FICA taxes, just half comes out of your Paycheck, and the other half never sees your paycheck)
My point is, politicians use the tax structure to lie to the people.
So what Biden is basically saying is that billionaires unrealized gains should be taxed based on the same concept as property tax.
A whole bunch of billionaire individuals and companies paid 0% in federal taxes last year. Trump has paid little to no taxes compared to the average taxpayer. Billionaires benefit by their ability to affect tax laws to their benefit and thus game the system which we the average joes end up paying the difference.
I don’t get why Turley is suddenly so concerned about presidents lying. Trump was lying his mouth off throughout his entire term and is still going and he never called him out on it, well with the exception of a few mild critiques, but that was rare. We all know Trump is a compulsive liar and Republicans and even Turley is ok with lying. They don’t really care about the lying. It’s just something to rage about when they have nothing else to rage about. Fox News has been lying for a while and we all know because it’s on record, but Turley is strangely very quiet about it. Not even the fact that Fox News has committed multiple journalistic integrity and ethical abuses that he often criticizes media for.
Turley seems to be working overtime trying to deflect from the upcoming storm of indictments against Trump. Will he remain silent or go on a Hunter Biden “scandal” deflection binge?
So what Biden is basically saying is that billionaires unrealized gains should be taxed based on the same concept as property tax.
You don’t even know what unrealized gains are.
I guess Svelaz wants Americans to pay capital gains taxes on all stocks THAT THEY HAVEN’T SOLD YET. So if you have an IRA or annuity that has risen since 2016 you should be paying taxes on it even though you haven’t pulled any earnings from it yet???
Svelaz is a Democrat operative who comments 200 times on every column Professor Turley writes. He isn’t very bright, he isn’t honest at all and he is just a partisan hack who gets paid by the comment.
HullBobby,
Notice how Svelaz, is not only a expert on law, on Constitutional Law, IT, virology, hazmat, railroads, and now is a tax expert too!
If there is anything the Biden admin needs help on, the Costco Chicken is there, at the ready, spreading his misinformation, disinformation and damned lies!
I am sure he is sitting in his Costco Chicken superhero outfit, cape and all, in front of his computer in his mom’s basement, muttering over and over again,
“I am good boy, doing good work for the DNC! I am good boy, doing good work for the DNC! I am good boy, doing good work for the DNC!”
Now, if only his cape would get caught in the jet intake of a passenger plane.
(without using a search engine, name that pop-culture reference!)
(and for those of you left wokeists, that is a joke, and go buy yourself a sense of humor)
. . , he get’s paid by the number of times he says “liar” “Trump” and “Fox News”.
Svelaz: Tell us please, who are your heroes in politics, contemporary ones? And you hate Fox News. Well, who do you really connect with as purveyors of true TV news? Just curious.
Apparently you don’t own real estate. Property tax on real estate is not a tax on unrealized gain. Real property is taxed on its gross fair market value without consideration of the owners mortgage.
A property owner with no equity pays the same tax as a property owner with $1,000.000.00 in equity if both properties are of equal value.
It is doubtful that Svelaz owns anything significant, not given by another.
Let’s tax unrealized gains every year. But of course then the IRS would have to credit you every year on your 1040 for unrealized losses. We’ll need another 87,000 new IRS agents
I’m retired now but I worked for the federal government for 35 years. Our agency was half auditors. We couldn’t ever get enough accountants to fill those positions. The idea that the IRS is going to be able find qualified people to do this work is unreasonable. Just like cops, you can’t chase them away and then say you’re going to spend $10M and think you’ve solved anything.