Musings on Markets: The Billionaire Tax and Its Fundamental Flaws
Damodaran critiques the proposed billionaire tax on unrealized capital gains as fundamentally flawed tax policy that will generate less revenue than promised while creating unintended economic consequences. He argues the tax is narrowly micro-targeted, relies on volatile capital gains income, suffers from liquidity challenges on illiquid assets, and will incentivize asset sales and corporate restructuring that ultimately harm the broader economy and future tax revenues.
Metrics in this report
$1,000,000,000dollars
Proposed billionaire tax applies to individuals with assets exceeding $1 billion or income exceeding $100 million for three consecutive years
1000count
less than
Number of U.S. taxpayers estimated to be affected by billionaire tax proposal
3.1%percent
2018 federal effective tax rates by income group
23.8%percent
2018 federal effective tax rates by income group
$400,000dollars
Income level below which President Biden promised no tax increases; affects 98.2% of income tax payers
26.5%percent
House Ways and Means Committee proposed increase from 21% baseline