The New York Times reported that the White House will request that Congress pass a new minimum wealth tax on the ultra-rich as part of the Biden Administration’s budget proposal for the next fiscal year. Called the “Billionaire Minimum Income Tax,” the tax would stipulate that households worth more than $100 million pay a rate of at least 20% on their income as well as unrealized gains in the value of their liquid assets, including stocks and bonds, which are otherwise taxed only when sold. The proposal would only apply to the top 1/100th of 1% of U.S. households, with over half of the revenue predicted to come from individuals worth more than $1 billion.
Prior to unveiling this proposed wealth tax, the Biden Administration had advocated for increasing the top marginal income tax rate, raising taxes on corporations, and imposing a higher capital gains tax, while heretofore ignoring calls from many on the progressive wing of the party, such as Senators Elizabeth Warren and Ron Wyden, for the imposition of some sort of billionaire wealth tax. Biden’s latest proposal comes as the administration has struggled over how to finance its economic and climate agenda amidst difficult political constraints within the Democratic ranks. Indeed, Arizona Senator Kyrsten Sinema previously opposed raising the corporate tax rate or lifting the top marginal income tax rate, while West Virginia Senator Joe Manchin III had expressed skepticism about an earlier billionaire wealth tax proposal.
Additionally, apart from political obstacles to passage, the tax faces possible administrative and legal difficulties as well, according to the Times. Treasury Secretary Janet Yellen has noted that a wealth tax would pose “very difficult implementation problems,” and various others have argued that a wealth tax, even if approved by Congress, could face a constitutional challenge, given the difficult questions raised about how the IRS and taxpayers would assess the value of non-publicly traded assets as well as investments that lose money.
Meanwhile, as Bloomberg reported, the Supreme Court is set to hear a pair of cases next week that will test the expansion of forced arbitration for workers. The first case, Southwest v. Saxon, which OnLabor contributor Andrew Strom recently analyzed at length, involves Latrice Saxon, a Southwest Airlines ramp supervisor who sued the airline under the FLSA for failure to pay her overtime. Although Saxon was required to sign a mandatory arbitration agreement as a condition of employment, she argued that because she spends most of her workday loading and unloading cargo, including passengers’ luggage, mail and freight, she is covered by the Federal Arbitration Act’s (FAA) exemption for transportation workers and therefore is not precluded from bringing suit in federal court. However, Southwest is now arguing before the Supreme Court that the FAA’s exemption for transportation workers should be read to only apply to workers who actually cross borders, not workers like Saxon whose connection to interstate commerce is too attenuated. If accepted by the Court, Southwest’s argument would constitute a major expansion of forced arbitration for work-related disputes, and would seriously curtail the ability of airline, transportation and delivery workers to vindicate their federal statutory rights through the courts.
The other case, Viking River Cruises v. Moriana, will test whether a unique California law, the Private Attorneys General Act (PAGA), which enables employees to bring suit on behalf of the state for labor violations, should permit plaintiffs to circumvent mandatory arbitration agreements signed by workers as a required condition of employment. Here, Viking River Cruises employee Angie Moriana sued the company on behalf of herself and similarly situated workers for various state labor violations, including minimum wage and overtime violations. The crux of the issue is that unlike individual plaintiffs, the state is not bound by an arbitration agreement. Thus the PAGA statute has allowed employees to circumvent the forced arbitration agreements they signed as a condition of employment and still seek recourse for labor violations in court.