Warren Buffett and Jamie Dimon want the billionaire to pay Uncle Sam a fair distribution. But “billionaire tax” can affect all the wrong people

America’s most famous investors and the head of the most powerful banks on Wall Street Clear message In Washington: More taxation. CEOs of Warren Buffett and Jamie Dimon Berkshire Hathaway JP Morgan Chase each has both It was proposed To raise taxes on the rich as a matter of fairness, Rapid growth Federal deficit.

Congressional Republicans who traditionally oppose the hiking tax of wealthy people are It is reportedly The so-called “Billionaire TaxIt highlights how President Donald Trump’s populist appeal has changed the party. The proposal has been opposed by many prominent Republicans, but the move has floated to help pay tips, overtime hours, social security benefits, and tax credits. expansion of the provisions of the 2017 Tax Reductions and Employment Act.

But that argument aside, increasing income taxes for high-income earners is unlikely to create billionaires like Buffett and Dimon. Elon Muskand Jeff Bezos pays the government more. That’s because very wealthy individuals accumulate a vast majority of their wealth from investment income, not from wages and salaries like most Americans. meanwhile, Recruitment Internal Revenue Agency’s Audit Division and A dramatic change At the top of the agency, this means that tax avoidance can be even easier.

In other words, the “billionaire tax” could fall farther on bakers, doctors, lawyers, professional athletes and for-profit executives, rather than on Musk, Bezos, Buffett, Mark Zuckerberg, and more. In fact, legal strategies allow them to ignore them altogether.

For reference, Bezos is the founder of Amazondespite being multi-million yen, he did not pay one cent in federal income tax from 2007 and 2011, According to Analyzing his tax returns Propublica In 2021, Bezos is currently the second-largest person in the world with a net worth of $195 billion. Around Bloomberg Billionaire Index.

Tesla Elon Musk, the CEO who leads the way with a net worth of $300 billion, managed the same feat in 2018. Propublica But they discovered that the 25 wealthiest people in the country have not eschewed a lot of taxes for years as Buffett.

Oracle Omaha has consistently raised this issue himself, notoriously pointing out that he is subject to a lower tax rate than his secretary, Debbie Bossanek.

Bosanek somewhat carelessly became the face of US tax inequality, and in 2011 President Barack Obama proposed what is called “so-called.”Buffett Ruleswas intended to raise the effective tax rate for billionaires to 30% by eliminating certain tax credits and subsidies.

“Billionaires” won’t cut it

Six states, including California, Connecticut, Maine, Massachusetts, New Jersey and New York (along with Washington, DC) have adopted a “billionaire tax,” all focused on revenue. At the federal level, the highest rate of 37% applies to individuals making at least $626,350. Congressional Republicans are reportedly considering raising that rate to 40% of those making more than $370,000.

For now, however, the proposal does not appear to affect eligible dividends and long-term capital gains, and is currently hit at a top rate of 23.8%. Private equity also benefits from being taxed at that rate I’m interestedalso explains most of the compensation for venture capital and hedge fund managers. Trump indicated he wants to close the loophole. The Congressional Budget Office estimates it will reduce federal deficits. $13 billion Until 2034.

However, some argue that super wealthy people are already subject to high tax rates. American Tax Foundation, a conservative think tank; say 2024 study The Treasury shows that the country’s wealthiest individuals are being hit with a 60% effective tax rate when considering corporate income and real estate taxes at home and abroad, as well as state and local taxes.

“The Treasury investigation is undoubtedly asked to demonstrate that wealthy Americans pay relatively small amounts of income tax compared to total wealth,” wrote Tax Foundation President Scott Hodge. “But most governments, foreign and domestic, tax people and businesses come with their income, not their wealth.”

A simple “billionaire tax” would not change that.

This story was originally introduced Fortune.com