At the same time that the Australian Government provided a Yawn Budget, the President of the US released his budget. His is much more interesting, especially as there is no way it will ever become law so he can pretty much say anything.
Other than promising over $850 billion for defence (substantially more than all tax revenues in Australia), he promised a billionaires tax.
This proposal will see households worth more than $100 million pay at least 20% in taxes on both income and “unrealised gains”.
So they work out the tax they pay under the normal rules, they then work out what was their income (which is on their tax return), and then they work out the unrealised gains on their assets for the year. If the tax they pay under the normal rules is less than 20% of both their income and their unrealised gains for the year, they then pay this additional tax to get to 20%.
However, this additional tax is payable over the next 9 years.
But the best part of the plan is that when the taxpayer actually realises the gain (sells the asset) and has to pay tax under the normal rules, they get a credit for any of this additional tax they paid under the Billionaires Tax.
I normally hate these taxes, but I like this one as it is just a prepayment of future tax.
Given there are about 300 real billionaires in Australia (worth more than $1,000 million dollars) maybe we should consider this. But don’t think it will raise much money.
This proposal of the President will bring in about $36 billion a year – which is less than the yearly increase to the Defence budget he announced last night and will cover 4.2% of the yearly Defence budget… pretty much a rounding error…