Advancing Equity Through Tax Reform
In a bold move to address racial wealth inequality and promote fairness in the tax system, President Biden and Treasury Secretary Janet Yellen have put forth a comprehensive wealth tax redistribution strategy as part of their fiscal year 2025 proposal. This sweeping reform aims to raise revenues by ensuring that the wealthy and large corporations contribute their fair share, while also expanding tax credits for working families and enhancing tax administration.
The proposed measures include a minimum tax of 25 percent on total income, which notably encompasses unrealized capital gains, targeting taxpayers with wealth exceeding $100 million. This initiative is expected to mitigate economic disparities and generate crucial revenue for the government. Furthermore, the administration seeks to address inheritance taxes, highlighting that in 2019, a significantly larger percentage of White families received inheritances compared to Black and Hispanic families. The proposal suggests limiting the duration of the Generation Skipping Trust (GST) tax exemption and aligning the taxation of long-term capital gains and dividends with ordinary rates for those earning over $1 million.
Additionally, the proposal calls for an increase in corporate income tax rates from 21 percent to 28 percent and a revision of the Global Minimum Tax Regime. It also targets specific loopholes that have historically benefited high-income individuals, such as the carried interest preference and like-kind exchange real estate preference.
On the individual front, enhancements to the child tax credit and the earned income tax credit are proposed, alongside permanent expansions of the premium tax credit. These reforms aim to provide greater support to working families and make health insurance more accessible.
The administration’s plan does not shy away from environmental and health concerns either. An excise tax on electricity used by digital asset miners is proposed to curb mining activities and their associated environmental impacts. Furthermore, the proposal includes repealing several tax credits and deductions related to oil and gas production, signaling a shift towards more sustainable practices.
As part of this extensive overhaul, the Treasury Department will be empowered with regulatory authority to ensure effective implementation of these changes. The proposal underscores that these reforms are not merely fiscal adjustments but are deeply rooted in the pursuit of equity, aiming to dismantle long-standing wealth gaps that perpetuate racial economic inequality.
