Biden's Desperate Wealth Tax Flip-Flop
On the campaign trail, Biden rejected wealth taxes as punitive, divisive, and unworkable. Now, as president, he’s embraced the idea.
In December 2019, when Joe Biden, still campaigning for the Democratic presidential nomination, released his tax plan, much of the coverage focused on the contrast between his comparatively plan and the plans issued by his more progressive rivals. A CNBC report on his plan was labeled "wealth tax wars." A Washington Post headline noted that Biden's $3.2 trillion tax plan highlighted "divisions" with Sens. Bernie Sanders (I–Vt.) and Elizabeth Warren (D–Mass.). Among the starkest of those divisions was that the former vice president had rejected calls by Warren and Sanders to back a wealth tax on the richest Americans.
On the campaign trail, Biden himself played up that contrast. Among the criticisms lobbed at the Sanders and Warren wealth tax proposals was that they were fundamentally punitive, because they taxed wealth of a small, specific group of individuals. He told a wealthy crowd of supporters in Los Angeles that while they shouldn't expect a tax cut from him, there would be "no punishment either."
Around the same time, a CNBC reporter asked Biden about arguments—some of which came from experts friendly to Democrats—that the wealth taxes proposed by his rivals would be unworkable and punitive. In response, Biden allowed that "parts of the plan, those objections apply." He complained about divisive tax policy, and rejected the idea of a "a single tax, on a single group of people." Earlier in the interview, Biden, without prompting, went out of his way to insist that "tax policy is not about punishment."
Biden was running as the moderate in the race. His goal was to separate himself from the progressives. So he rejected the idea of a tax policy that he saw as divisive, punitive, and potentially unworkable.
Yet now, as president, Biden has embraced a wealth tax of his own. In his latest budget plan, Biden proposed something the White House has dubbed the "Billionaire Minimum Income Tax," which applies to all income, realized and unrealized, for households worth more than $100 million. The Biden administration is framing this as a form of "prepayment" on future capital gains—which is to say it's a form of taxation on money that someone has not actually seen, based on the value of their holdings. It's not exactly the same as the wealth taxes proposed by Warren and Sanders, but it's designed around the same fundamental idea: the taxation of personal wealth, rather than of cash income, which often takes the form of difficult-to-value assets.
Most of the same criticisms that applied to the Warren and Sanders plans still apply: Biden's plan probably wouldn't raise nearly as much money as the administration assumes: Wealth taxes are exceptionally difficult and resource-intensive to administer, which is why most OECD countries that have implemented wealth taxes eventually dropped them. It's also quite likely to be unconstitutional. At minimum, if it passed, it would be tied up in court.
But of course, it's not intended to pass, which makes this exercise even more of a charade. Biden's latest wealth tax proposal is part of the White House's annual budget proposal, which is always a sort of wish list rather than a realistic path forward for the budget.
Biden's wealth tax, then, is a desperate policy gimmick by a White House struggling with low approval numbers on the economy. Even Biden's allies understand this. Late last year, his administration tried to convince congressional Democrats to include a wealth tax in one of the big spending bills. At the time, Speaker of the House Nancy Pelosi (D–Calif.) reportedly called it "a publicity stunt." That's exactly what this is.
It's a publicity stunt, however, that tells us something, not only about Biden's leftward drift, but about his comportment as president, given his previously stated opposition to the idea.
Biden is willing to make an obvious phony of himself, embracing a policy he knows is punitive, divisive, unworkable, and virtually certain not to pass—and he's willing to do so simply to get attention. Not only is Biden not a moderate, he is evidently not trustworthy either.