Just because President Biden wants to make sure the system is fair to everyone doesn’t mean it will happen.  It won’t even go by the number of popular votes he can obtain. (It’s obvious that 99% of us have way more votes than the 1%.)   At the very least, the 1% will hire lawyers, accountants (and lobbyists) to put a kibosh on Biden’s concept.

But…that’s a bit of a simple response.  Because many of the 1% know that the handwriting is on the wall- and change is coming.

Let’s start with the simplest change.  Taxing capital gains.  The administration plans to raise the tax to 39.6% (the maximum tax rate) plus the 3.8% Medicare surtax (meaning the tax levy is really 43.4%)- but only after exempting the first million in capital gains from this change in rates.

But… let’s get real.  If the taxpayer never sells the stock, there is no gain.  Most of the rich simply do that- and then when they die, their heirs inherit the stock- but are only responsible for any gains that occur after they’ve inherited the stock.  (This is why there is some $ 1.5 trillion of unrealized capital gains!) And, you can bet if nothing else changes, the rich will continue this practice- and do it even more frequently- so instead of increasing the Treasury collections, we’d lose $ 33 billion over the next 10 years, as folks husband their capital gains in their portfolios and never sell the stock.

That’s why President Biden plans to eradicate the Angel of Death loophole.  Instead of letting inheritees use a stepped up basis for the stock they inherit, they will now be responsible for all gains on the stock since it was first purchased.  And, it will be due upon the death of the original stockholder.

Whoa! Instead of reducing the Treasury collection by $ 33 billion, there will be some $ 113 billion in revenue enhancements!  (Below is one example as to why that is true.)

The same concept applies to raising corporate tax rates.  Because before one even heard that the corporate tax rates would be rising, we knew that Janet Yellin was working with other countries to set a minimum tax rate for all global corporations.  Under that plan, should a firm (say, Apple) elect to choose a tax haven country to shelter profits, the country where the firms was headquartered would collect all taxes on the profits attributed to the haven country.  Ooops!  There goes that loophole, too.

Then, there’s my favorite loophole.  The one that should have been closed long ago.  “Carried Interest”.  This is specifically derived for those folks at hedge funds or private equity firms- where they get to redefine their income as capital gains and not ordinary income.  Now that we are changing the rates on capital gains, the value of this loophole is greatly attenuated, but Biden wants the BS concept of “carried interest” eradicated.

Then, there’s another loophole.  One that was slightly closed under TheDonald’s Tax Cut and Jobs Act.  At that time, all 1031(b) exchanges on things like cars and equipment were terminated.  But, the real estate provisions remain.  Biden wants these terminated as well.  (Biden also plans to limit the size of losses business can claim as offsets to their taxable income.)

Moreover, the individual tax rates being proposed by President Biden only apply to those making $ 400K a year or more- with most of the changes applied once annual revenue is $ 1 KK.

And, by having the banks provide the annual turnover in business accounts to the IRS, it will become clear which firms have been hiding revenue from the tax collectors.  That will augment the collection from the rich dramatically.

You do notice, in this entire discussion,  that President Biden is not changing the estate or gift taxes.  (Nor, I might add, has he even considered the termination of SALT (state and local tax) limitations, which primarily benefit the rich.

At least, not now.