MD Billionaires Could Pay 20% More Under Biden Tax Plan

MARYLAND — Billionaire Mitchell Rales and other wealthy Maryland residents could pay 20 percent more in taxes under a “Billionaire Minimum Tax” proposed in President Joe Biden’s fiscal year 2023 budget proposal.

The Biden administration is asking Congress to approve the proposal, part of its efforts to reduce the federal deficit over the next decade while at the same time funding new spending. The proposed tax on the ultra-wealthy would affect fewer than 1 percent of Americans, but “eliminates the inefficient sheltering of income for decades or generations,” the White House said Monday at a news conference.

Under the proposal, households worth more than $100 million would pay at least 20 percent in taxes on both income and “unrealized gains,” or the increase in an unsold investment’s value. Many wealthy people hold onto these investments for decades, meaning they’re never taxed, the administration said.

The tax would apply only to the top one-hundredth of 1 percent of Americans, Biden said at a news conference, but would raise “$360 billion that can be used to lower costs for families and cut the deficit.”

Among those likely affected would be the following Maryland residents with a place on the Forbes’ Real-Time Billionaires ranking:

• Mitchell Rales, Danaher Corp., whose net worth was $6.3 billion as of the close of business Tuesday
• Stephen Bisciotti, Allegis Group and Baltimore Ravens, whose net worth is $6.1 billion
• Ted Lerner, Lerner Enterprises and Washington Nationals, whose net worth is $4.1 billion
• David Rubenstein, Carlyle Group, whose net worth is $4.2 billion
• Jim Davis, Allegis Group, whose net worth is $4.6 billion
• Bernard Saul II, B.F. Saul Company and The Hay-Adams hotel, whose net worth is $3.9 billion
• Dan Snyder, Snyder Communications and the Washington Commanders, whose net worth is $4.0 billion
• Kevin Plank, Under Armour, whose net worth is $1.7 billion
• Keith Dunleavy and family, Inovalon, whose net worth is $1.7 billion
• Theodore Leonsis, Monumental Sports including the Washington Wizards and Capitals, whose net worth is $1.6 billion

“Now, I’m a capitalist, but … if you make a billion bucks, great,” Biden said. “Just pay your fair share. Pay a little bit.

“A firefighter and a teacher pay more than double — double the tax rate that a billionaire pays. That’s not right. That’s not fair.”

The proposed policy is “extremely nuanced,” according to an Associated Press explainer. It would allow wealthy households to spread some payments of their unrealized gains over nine years, and for five years on new income going forward. In effect, the AP explained, the payments are a prepayment on tax obligations they will owe when the investments are sold.

The proposal could be met with resistance by moderate Democrats, including Sens. Joe Manchin of West Virginia and Krysten Sinema of Arizona, but it gives Democrats a talking point as inflation reaches a 40-year high. At the same time, for Republicans who oppose it, it creates a political liability of appearing to side with multibillionaires.

In Maryland, major changes to the state's tax code were announced late Monday.

Gov. Larry Hogan, Senate President Bill Ferguson, and House Speaker Adrienne A. Jones reached a bipartisan agreement to provide $1.86 billion in tax relief over five years for Maryland retirees, small businesses, and low-income families.

Combined with the recently-enacted gas tax suspension, this legislative session will deliver nearly $2 billion in tax relief, Hogan's office said.

“Today, we are announcing the largest tax cut package in state history with major and long-overdue relief for Maryland’s retirees,” Hogan said in a statement. “Cutting our state’s retirement taxes is something we have been trying to accomplish for seven years, and I want to thank the leaders of the General Assembly for working with us to get this done for Maryland’s seniors. This agreement will deliver on our promise to provide real, long-term relief for hard-working Marylanders dealing with inflation and higher prices, and help create more jobs and more opportunity to continue our strong recovery.”

“The last two years of the pandemic have shown the cracks in our state’s civic infrastructure,” said President Ferguson. “As I’ve said since the beginning of the 2022 legislative session, everything we do must prioritize our state’s economy and the health of our residents. This historic agreement demonstrates that regardless of political party, leaders come together to deliver vital services and economic relief for families, seniors, and small businesses.”

This bipartisan tax relief agreement includes the following provisions for FY23-FY27:

• Tax Relief For Retirees 65 and older making up to $100,000 in retirement income, and married couples making up to $150,000 in retirement income. As a result, 80% of Maryland’s retirees will receive substantial relief or pay no state income taxes at all. ($1.55 billion)
• The Work Opportunity Tax Credit to incentivize employers and businesses to hire and retain workers from underserved communities that have faced significant barriers to employment. ($195 million)
• Family Budget Boosters: sales tax exemptions for child care products such as diapers, car seats, and baby bottles, and critical health products such as dental hygiene products, diabetic care products, and medical devices. ($115.6 million)

The bipartisan agreement also makes a one-time record $800 million investment in the Blueprint for Maryland’s Future while maintaining a record level in the Rainy Day Fund. Further, this agreement uses the surplus to make strategic and historic investments that:

• Support public safety and victims of crime;
• Ensure Maryland’s world-class health system by supporting hospitals, nursing homes, and assisted living facilities;
• Expand Medicaid dental coverage for adults, in-home medical care, and autism services;
• Help families by expanding access to child care, providing bonuses for public school staff, and increasing student aid at higher education institutions;
• Spur local economies and job opportunities through capital funds for school construction, affordable rental housing, state facility maintenance, and local transportation infrastructure; and
• Protect against the growing threat of cyber attacks.

Last year, ProPublica published a bombshell report based on unreleased IRS files that showed multibillionaires Jeff Bezos, Elon Musk, Mark Zuckerberg and Rupert Murdoch paid very little or sometimes nothing at all in income taxes.

The Associated Press contributed reporting.