Biden faces leaving a bigger wealth gap as a legacy | Opinion

The widening wealth gap is the opposite of what US President Joe Biden has promised. But billionaires like Tesla boss Elon Musk will feel little pain over the Democratic tax plan, as the political party is also slashing spending on social programs to half of what was initially proposed, to about $1.8 trillion. Biden’s quest to create a fairer economy still falls short.

The biggest problem is that the president is having a hard time getting his ideas across to his party members. He has said repeatedly that he is tired of the rich not paying their fair share of taxes, something he says will change under his leadership. He proposed doubling the capital gains rate to nearly 40%, which could affect people like Musk, whose fortune according to Forbes magazine is about $ 275 billion and his wealth is largely related to the ownership of stocks and shares. Tesla options.

Due to opposition from two moderate Democratic senators, the latest version of Biden’s plan unveiled Thursday doesn’t touch on capital gains at all. Eliminate the legal loophole “transferable interests”, which allows the barons of private equity and the hedge funds Paying a tax on investment earnings less than the ordinary income tax was one of the first casualties. Instead, a 5% surcharge is suggested on annual income over $10 million, and possibly an additional tax for those earning more than $25 million.

Although the proposal increases spending on social programs, such as free preschool education for all families and childcare assistance, Democrats could do more with their control of Congress and the White House. A key part of Biden’s initial proposal, 12 weeks of paid family and medical leave, has been omitted. And the decision to expand Medicare, health insurance for seniors, includes only hearing, not dentistry or vision.

Not only is this a missed opportunity, but it risks widening the wealth gap, contrary to Biden’s agenda. In 2020, the top 20% increased their share of total income, while the lowest 20% decreased, according to the US Census Bureau.

The White House estimates that the billionaire’s extra cost will likely raise $230 billion over 10 years, and hardly a drop in the $43 trillion wealth held by the richest 1%, according to the Federal Reserve. Programs destroying the poor while protecting America’s billionaires will only widen the wealth gap.

The authors are columnists for Reuters. opinions are yours. Translated by Carlos Gomez Abajo is a responsibility five days