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Yahoo
2 days ago
- Business
- Yahoo
Opinion - America has a billionaire problem — we need a wealth tax to fix it
We are living through an experiment in billionaire governance. President Trump has stuffed his administration with the wealthiest individuals in modern history and handed unprecedented power to billionaires like Elon Musk and 13 Cabinet members who are now actively leveraging their newfound power to further enrich themselves. At the same time, Republican congressional leaders are moving forward with a tax package that will disproportionately benefit the ultra-wealthy. Transparently, I'm wealthy and I oppose this type of handout. Time and again, I have seen how the richest of the rich lobby for tax cuts they promise will trickle down. That has never happened and this time will be no different. The good news is that the American public is souring on this arrangement and seeing through their greedy charade. Approximately 300,000 American households with wealth exceeding $50 million are sitting on over $35 trillion — a total that is equivalent to the entire U.S. national debt and more than the value of all the goods and services produced in America. Such excessive concentration of wealth is the biggest threat facing our nation. It bestows a dangerous degree of economic and political power on a select few and arms them with the ability to distort our democracy and our economy for personal gain. As billionaires tighten their grip on our economy and political system, lawmakers must consider sweeping tax reforms to counter this threat. And they need not worry about raising taxes on middle-class Americans or even households earning above $400,000; the immense concentration of wealth at the very top means that focusing solely on the top 0.1 percent of Americans would generate substantial revenue while leaving 99.9 percent of Americans completely untouched. One mechanism for achieving this goal is a wealth tax on the ultra-wealthy. The venerable Tax Policy Center recently released an analysis of a policy called the 'Five and Dime tax.' This proposal would impose a 5 percent tax on household wealth exceeding $50 million and a 10 percent tax on household wealth over $250 million. This tax would raise $6.8 trillion over ten years, slow the rate at which our nation mints new billionaires, and reduce billionaires' share of total national wealth from 4 percent to 3 percent. Lawmakers would have options about how to spend the revenue this tax raises — on middle class tax relief, debt reduction, or high-return public investments, helping working families afford childcare, affordable housing, infrastructure, and strengthening climate initiatives. Ultimately, taxes on the ultra-rich could transform American society for the better and grow our economy by discouraging unproductive financial behaviors and promoting fair competition — leading to a more dynamic and efficient system. Critics will inevitably claim such a tax would promote high levels of avoidance or prove impossible for the IRS to implement. And while there are challenges for administering any bold proposal, the opportunity to rebalance our economy and democracy in favor of working families is reason enough to work through those hurdles. The American people certainly agree. A recent poll of voters in California's 13th District, which elected President Trump and Rep. Adam Gray (D) in 2024, found that nearly two-thirds support taxing billionaires and 63 percent back the Five and Dime tax. After witnessing the consequences of billionaire governance firsthand under this administration, Americans understand what's at stake. Now it's time for lawmakers who care about our country's future to embrace solutions that empower everyone, not just those at the top. Alan Davis is a philanthropist, tax expert, and director of the WhyNot Initiative, the social justice program of the Leonard and Sophie Davis Fund. He is the co-director and co-founder of the Extreme Wealth Center. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
2 days ago
- Business
- The Hill
America has a billionaire problem — we need a wealth tax to fix it
We are living through an experiment in billionaire governance. President Trump has stuffed his administration with the wealthiest individuals in modern history and handed unprecedented power to billionaires like Elon Musk and 13 Cabinet members who are now actively leveraging their newfound power to further enrich themselves. At the same time, Republican congressional leaders are moving forward with a tax package that will disproportionately benefit the ultra-wealthy. Transparently, I'm wealthy and I oppose this type of handout. Time and again, I have seen how the richest of the rich lobby for tax cuts they promise will trickle down. That has never happened and this time will be no different. The good news is that the American public is souring on this arrangement and seeing through their greedy charade. Approximately 300,000 American households with wealth exceeding $50 million are sitting on over $35 trillion — a total that is equivalent to the entire U.S. national debt and more than the value of all the goods and services produced in America. Such excessive concentration of wealth is the biggest threat facing our nation. It bestows a dangerous degree of economic and political power on a select few and arms them with the ability to distort our democracy and our economy for personal gain. As billionaires tighten their grip on our economy and political system, lawmakers must consider sweeping tax reforms to counter this threat. And they need not worry about raising taxes on middle-class Americans or even households earning above $400,000; the immense concentration of wealth at the very top means that focusing solely on the top 0.1 percent of Americans would generate substantial revenue while leaving 99.9 percent of Americans completely untouched. One mechanism for achieving this goal is a wealth tax on the ultra-wealthy. The venerable Tax Policy Center recently released an analysis of a policy called the 'Five and Dime tax.' This proposal would impose a 5 percent tax on household wealth exceeding $50 million and a 10 percent tax on household wealth over $250 million. This tax would raise $6.8 trillion over ten years, slow the rate at which our nation mints new billionaires, and reduce billionaires' share of total national wealth from 4 percent to 3 percent. Lawmakers would have options about how to spend the revenue this tax raises — on middle class tax relief, debt reduction, or high-return public investments, helping working families afford childcare, affordable housing, infrastructure, and strengthening climate initiatives. Ultimately, taxes on the ultra-rich could transform American society for the better and grow our economy by discouraging unproductive financial behaviors and promoting fair competition — leading to a more dynamic and efficient system. Critics will inevitably claim such a tax would promote high levels of avoidance or prove impossible for the IRS to implement. And while there are challenges for administering any bold proposal, the opportunity to rebalance our economy and democracy in favor of working families is reason enough to work through those hurdles. The American people certainly agree. A recent poll of voters in California's 13th District, which elected President Trump and Rep. Adam Gray (D) in 2024, found that nearly two-thirds support taxing billionaires and 63 percent back the Five and Dime tax. After witnessing the consequences of billionaire governance firsthand under this administration, Americans understand what's at stake. Now it's time for lawmakers who care about our country's future to embrace solutions that empower everyone, not just those at the top. Alan Davis is a philanthropist, tax expert, and director of the WhyNot Initiative, the social justice program of the Leonard and Sophie Davis Fund. He is the co-director and co-founder of the Extreme Wealth Center.
Time of India
23-05-2025
- Business
- Time of India
10 ways Trump's 'big beautiful bill' could affect your wallet
US House Republicans advanced a multitrillion-dollar tax and spending package that could have sweeping impacts on household finances. It includes extended tax cuts, added requirements for federal benefits eligibility, and an increase to the national debt ceiling. The more than 1,000-page bill now heads to the Senate which will have the chance to approve or change provisions of the bill before it reaches Trump's desk. The proposed bill could significantly impact the financial well-being of many Americans. Without its passage, the expiration of existing tax cuts could cost the average household over $1,000. This figure doesn't even account for potential reductions in social service programs. Additionally, failing to act could contribute to a sharp rise in the national debt, which has already surpassed $36.2 trillion. ALSO READ: How will Trump's 'big, beautiful bill' impact lowest-income households and wealthy people in the US? Check details Here are ten ways how Trump's tax cut bill could affect your wallet: Your tax rate won't go up: In the US, the individual tax rates are set to expire at year's end and this means most households would see higher tax bills next year unless lawmakers act. This bill aims to maintain current tax rates while increasing the standard deduction to $16,000 for individuals and $32,000 for couples. According to an analysis by the Tax Policy Center, the combination of extended lower rates and new tax benefits would result in an average savings of $2,900 per household in 2026. Although about 80% of households would benefit, the top 20% are projected to receive the majority of those savings. Live Events Bigger child tax credit : Trump's 'big, beautiful bill' aims to increase the maximum child tax credit by 25%, raising it to $2,500 per child. This enhancement would benefit approximately 75% of income-eligible households. However, the lowest-income families would not receive the full amount, while parents earning up to $400,000 annually would qualify. The credit would remain at $2,500 for the next four years, after which it would be adjusted for inflation beginning in 2029. In 2024, about 40 million households claimed the credit. But undocumented immigrants would no longer qualify for the child credit, even if their children are U.S. citizens. Bigger deduction for older people: Senior citizens are already eligible for a higher tax deduction. Under the proposed bill, this deduction would increase by an additional $4,000 for the next four years for individuals with an adjusted gross income below $75,000, or $150,000 for couples. ALSO READ: Inside key components of Trump's 'big, beautiful' bill passed by House: All you need to know Break for entrepreneur or gig worker: The 2017 law introduced a "pass-through" deduction aimed at specific types of business income. This tax break benefits individuals whose earnings aren't derived from traditional salaries—such as freelancers, Uber drivers, wealthy business owners, and partners in law, accounting, or medical firms. The new bill passed by the House would raise that deduction from 20 to 23 percent. No tax on tips or overtime pay: The no tax on overtime proposal aims to exempt overtime pay from federal income tax. This would mean that workers who log extra hours would not have to pay federal taxes on their overtime earnings, potentially allowing them to take home more of their total pay. The proposal has caught fire among politicians since Trump floated it on the campaign trail. No tax on social security: The House bill fell short of delivering on that promise, but it did temporarily increase the standard deduction of up to $4,000 (£2,983) for individuals 65 and over. That deduction would be in place from 2025 to 2028. The deduction extensions begin to decrease after $150,000 for married taxpayers filing jointly and $75,000 for individual filers. ALSO READ: Trump's 'Big, beautiful bill' is here: Who are the top gainers and losers? Check details No tax credit claim for buying an EV: Trump's tax bill does away with major portions of former President Joe Biden's Inflation Reduction Act, known as the IRA, which includes tax credits of up to $7,500 for EV purchases among many other incentives. Republicans are rolling back many Biden-era tax incentives for confronting climate change, including the credit of as much as $7,500 for buyers of electric vehicles. What about Medicaid : Republicans have added additional restrictions and requirements for Medicaid, the health care programme relied upon by millions of elderly, disabled and low-income Americans. The legislation would require Medicaid recipients living above the federal poverty line to start paying part of their health-care costs, add work requirements for many able-bodied childless adults, increase processes for recipients to verify their eligibility and more. The Post has reported that the nonpartisan Congressional Budget Office predicts the plan would cause 8.7 million people to lose their Medicaid benefits. ALSO READ: In US tax bill, babies to get $1,000 bonus in 'Trump Accounts': Check eligibility criteria and other details Student loan won't likely be forgiven: Although President Biden did not fully implement his most ambitious proposal to eliminate student debt for millions of Americans, he did establish several loan forgiveness programs benefiting many borrowers. However, a Republican-backed bill aims to reverse these initiatives, potentially saving the government $295 billion over the next ten years. You might lose food stamps: The proposed bill would mandate that 28 states cover a greater portion of the expenses for delivering and managing SNAP benefits. These states would face a choice: either increase funding or reduce benefit levels. According to the nonpartisan Congressional Budget Office, the reductions in Medicaid and SNAP would ultimately lead to a decrease in overall household resources for low-income Americans, despite the inclusion of a modest tax cut.
Yahoo
23-05-2025
- Business
- Yahoo
IRS Direct File will be cancelled if Republican tax bill becomes law
The $3.8 trillion Republican tax bill that just passed the House includes a provision to kill off the popular IRS Direct File program, which lets people file their federal income tax returns for free online. The bill still needs to pass the Senate to become law, but if the bill is enacted as currently written, the Direct File program is slated to be eliminated within 30 days of the law's passage. The bill also requires the U.S. Treasury Department to create a task force to design a partnership between the IRS and private-sector tax service providers. The task force would need to identify ways to replace any 'free file programs and direct e-file tax return systems.' That includes the IRS Free File program, an existing public-private partnership. Learn more: Five ways to file your taxes for free in 2025 IRS Direct File, which is separate from the Free File program, is a popular free option that offers guidance and support as you fill out your federal income tax return and file your taxes directly with the IRS. Most taxpayers have rated the Direct File program positively: About 90 percent of taxpayers said their experience was excellent or above average, according to a survey by the General Services Administration of about 11,000 Direct File users in 2024. On top of that, interest in the program is clear: About 73 percent of taxpayers said they'd be somewhat or very interested in using Direct File, according to a Tax Policy Center report in March, based on a survey of taxpayers aged 18 to 64. The Direct File program has been in Republican lawmakers' crosshairs for a while. In December, almost 30 Republican lawmakers sent a letter to President-elect Donald Trump, calling for him to end the Direct File program on his first day in office. Lawmakers in the U.S. House of Representatives introduced legislation last July to end the Direct File program. Elon Musk, de facto head of the 'Department of Government Efficiency,' or DOGE — also isn't a fan of the program. In February, he posted on social media that the government tech office that developed the Direct File program had been 'deleted.' Currently, the IRS's Direct File page is still up and running. Direct File doubled its reach to 25 states for the 2025 tax season, up from 12 states in 2024, the program's pilot year. An estimated 30 million taxpayers qualify for the Direct File program in 2025, the IRS says. More than 140,000 taxpayers filed their federal tax returns through the Direct File program in 2024. The Direct File program also expanded to accept more types of tax situations for the 2025 tax season. While taxpayers who used the system in 2024 could claim a handful of tax credits, including the earned income tax credit and the child tax credit, that list expanded for this filing season to include the child and dependent care credit, among others. However, taxpayers who want to claim other tax credits, such as the American Opportunity Tax Credit for higher education costs, or the tax credit for the costs of adopting a child, won't qualify for Direct File. And if you're hoping to deduct IRA contributions, Direct File doesn't support that. (See the full list of credits and deductions supported by Direct File on this IRS page.) The Direct File program, now in its second year, allows taxpayers to file their federal tax returns electronically with the IRS. The no-cost tool guides taxpayers through every part of their federal income tax return. Taxpayers can file using a smartphone, computer or tablet. One of the program's advantages is that, if you have questions as you're working on your return, you can get live support directly from the IRS via chat or phone. IRS representatives can answer basic tax questions and help with technical issues in English and Spanish. The Direct File program has income limits, as well as limits on the types of income, deductions and credits you can enter on your tax return. For the 2025 tax season: Your income must be less than $200,000 (less than $168,600 if you have more than one employer), and if you're married filing jointly, your spouse's income also must fall below these limits. If you're married filing jointly, your combined income must be less than $250,000. If you're married and file separately from your spouse, your income must be less than $125,000. Learn more: Current federal tax brackets and income tax rates To be eligible for Direct File, your income can come from the following sources: W-2 wages Social Security income Unemployment compensation Interest income Retirement income (reported on a 1099-R — limited eligibility starts March 2025) But if you're self-employed, or have business or rental income, you can't use Direct File. Same goes for IRA contributions or distributions: If you have either, you can't use Direct File. You can use the IRS Direct File program only if you claim the standard deduction — the program isn't available to people who itemize. Learn more: Standard deduction vs. itemized deductions: Pros, cons and how to decide But you can claim certain above-the-line deductions: student loan interest, educator expenses and health savings account contributions. You can't use Direct File if you want to deduct your IRA contributions. The Direct File program supports the following tax credits in 2025: Earned income tax credit Child tax credit Credit for other dependents Child and dependent care credit Premium tax credit Credit for the elderly or disabled Retirement savings contribution credit However, if you want to claim education credits, credits for energy efficient home upgrades or the adoption expense credit, you can't use the Direct File program. More taxpayers will have access to the IRS Direct File program in 2025. In 2024, the IRS kicked off the program with only 12 states; that number has expanded to 25 states for the 2025 tax season. For some of the states that participate in the IRS Direct File program, your federal return information will be transferred automatically to the state tax website, but in some cases you'll have to re-enter your information. Visit this IRS Direct File page to get the details for your state. Here is a list of the participating states: Alaska New Jersey Arizona New Mexico California New York Connecticut North Carolina Florida Oregon Idaho Pennsylvania Illinois South Dakota Kansas Tennessee Maine Texas Maryland Washington Massachusetts Wisconsin Nevada Wyoming New Hampshire If you don't qualify for the IRS Direct File program, you may have other options to file your tax return for free. In addition to Direct File, the IRS offers the Free File program, in which it partners with online tax software providers to provide free federal income tax return filing. Some providers also allow you to file a state income tax return. For the 2025 tax season, your adjusted gross income must be $84,000 or less to qualify for the Free File program. That AGI applies to any filing status: married filing jointly, single, head of household, etc. The IRS also offers the Volunteer Income Tax Assistance (VITA) program, which provides certified volunteers to prepare basic tax returns if you earn less than $67,000 a year, are disabled, or speak limited English. You can find a site near you by visiting this IRS page. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Boston Globe
22-05-2025
- Business
- Boston Globe
10 ways the Trump tax bill could affect your money
Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Here are 10 ways it could affect your finances. Advertisement Your tax rate won't go up During President Donald Trump's first term, Republicans ushered in across-the-board cuts for individual and corporate tax rates. But the individual rates are set to expire at year's end, which means most households would see higher tax bills next year unless lawmakers act. Neither party wants a tax increase for middle-income households; this bill would keep the tax rates at their current level while raising the standard deduction to $16,000 for individuals and $32,000 for couples. Between the extension of the lower rates and new tax breaks in the bill, the average household would save $2,900 in 2026, according to an analysis by the Tax Policy Center. While 8 in 10 households would see a break, it estimated that the top 20 percent of households would get the lion's share of those gains. Advertisement 'This is what 77 million Americans voted for,' Rep. Jason T. Smith (R-Missouri) said early Thursday during the House debate. Democrats countered that even if lower-income families have lower tax bills, some will end up worse off in total because of cuts to social service programs. If you're a parent, you might get a bigger tax credit The bill would raise the maximum child tax credit by 25 percent to $2,500 per child, an increase that would extend to roughly three-quarters of households with enough income to qualify. The full credit would not be available for the lowest-income households, but would be for parents earning up to $400,000 per year. The credit would hold at $2,500 for four years, then rise with inflation starting in 2029. Some 40 million households claimed the credit in 2024. However, undocumented immigrants would no longer qualify for the child credit, even if their children are U.S. citizens. Congressional staff estimates say this change will disqualify the parents of 2 million American kids from claiming it. If you're older than 65, you might get a bigger deduction Senior citizens already can take a larger deduction off their taxable income. The bill would increase that another $4,000 for seniors whose adjusted gross income is less than $75,000 (or $150,000 for a couple) for the next four years. If you're a gig worker or entrepreneur, you might get a break The 2017 law created a 'pass-through' deduction for certain types of business income. The benefit goes to people with income that is not salary-based, such as freelancers, Uber drivers, multimillionaire business owners, and partners in legal, accounting or medical practices. The new bill passed by the House would raise that deduction from 20 to 23 percent. Advertisement Most of the money goes to high earners. An analysis by the Tax Policy Center found that just 1 in 100 households in the lowest income quintile benefited from the deduction, while 1 in 4 in the top quintile benefited. It calculated that 89 percent of the benefit went to the top 20 percent of households, with more than half going just to the top 1 percent (and half of that going to the top 0.1 percent). Your overtime pay or tips might not be taxed The bill attempts to make good on several of Trump's campaign promises, including no tax on tips for specific industries such as food service and hair and nail care, and no tax on overtime pay for many workers. Although many economists deride the idea of not taxing tips, the proposal has caught fire among politicians since Trump floated it on the campaign trail. This week, it passed the Senate unanimously as a stand-alone bill, making it one of the most likely components of the sprawling House measure to eventually become law. If you're on Medicaid, you could pay more or even lose it Under President Joe Biden, the number of people receiving health-care through the national insurance program for the poor covered 1 in 5 Americans, its highest level ever. Republicans would finance some of their tax cuts by cutting Medicaid spending by $715 billion, which is one of the most controversial parts of Trump's bill. The legislation would require Medicaid recipients living above the federal poverty line to start paying part of their health-care costs, add work requirements for many able-bodied childless adults, increase processes for recipients to verify their eligibility and more. The Post has reported that the nonpartisan Congressional Budget Office predicts the plan would cause 8.7 million people to lose their Medicaid benefits. Advertisement In some states, you might lose food stamps The bill would require 28 states to pay a larger share of the cost of providing and administering SNAP benefits. States would have to choose whether to come up with the money or cut benefits. Due to the cuts to Medicaid and SNAP, the nonpartisan Congressional Budget Office says that low-income Americans would see a decline in their total household finances because of this bill, even with a small tax cut. 'We could be working to help Americans deal with the high cost of living,' Rep. Terri A. Sewell (D-Alabama) said during Thursday's debate. Instead, she said, the bill is mostly a giveaway to the rich. 'We'll pay for it by [taking] SNAP benefits from hungry families.' Your student loans will be less likely to be forgiven While Biden didn't achieve the most ambitious version of his plan for wiping out student debt for millions of Americans, he did create loan forgiveness programs for many borrowers. The Republican bill would roll that back, saving the government $295 billion over the next decade. You might get more relief from high state taxes Stay tuned on state and local tax deductions, one of the most hotly contested and fluid parts of bill negotiations. If a version of this bill passes the Senate, the legislation will almost certainly increase the amount of state and local taxes that can be deducted from filers' federal taxable income. But the specific level remains in question, with critics pointing out that the proposition is costly and largely benefits high earners in certain high-tax states. The first draft proposed raising the cap from $10,000 to $30,000, but some Republicans from states with high taxes, like New York, said they wouldn't support a bill unless the deduction increases. The measure passed Thursday would raise the cap to $40,000 in 2025 for taxpayers earning less than $500,000, and increase the cap and income limit by 1 percent annually for the next 10 years. Advertisement You won't be able to claim tax credits for buying an EV Republicans are rolling back many Biden-era tax incentives for confronting climate change, including the credit of as much as $7,500 for buyers of electric vehicles.
