These are the details
It is now reported that President Joe Biden is planning the largest hike in federal taxes in almost three decades.
The reason for this?
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He needs the money to fund a long-term economic recovery program to follow in the footsteps of the recently passed $1.9 trillion stimulus package.
According to unnamed sources, the major tax hike — the first since 1993 — is expected to pay for important Biden administration initiatives like “infrastructure, climate, and expanded help for poorer Americans.”
Yet, the sources explain that these planned changes will not fund these key priorities of the administration.
Namely, the tax hike will help Biden’s team to address what Democrats argue are “inequities in the tax system itself.”
Bloomberg reported that the changes include:
- Raising the corporate tax rate to 28% from 21%
- Paring back tax preferences for so-called pass-through businesses, such as limited liability companies or partnerships
- Raising the income tax rate on individuals earning more than $400,000
- Expanding the estate tax’s reach
- A higher capital gains tax rate for individuals earning at least $1 million annually
Sarah Bianchi, a former Biden economic aide, told Bloomberg:
“His whole outlook has always been that Americans believe tax policy needs to be fair, and he has viewed all of his policy options through that lens. That is why the focus is on addressing the unequal treatment between work and wealth.”
Bloomberg cited an independent analysis of the plan conducted by the Tax Policy Center, which maintains that it would raise taxes on American citizens by $2.1 trillion over 10 years. While it was initially estimated that the plan would raise taxes by $4 trillion over a decade, the group revised its forecast last November.
Yet, although highly disturbing, this news should not surprise you.
Biden and the progressive Democratic lawmakers have already shown their intention to raise taxes just to accomplish their policy goals.
Dems did not even consider the continued economic difficulties due to the pandemic in the country and snuck $60 billion in tax hikes into the coronavirus relief bill.
Yet, despite falling in line with Biden’s campaign promises and demands from progressive lawmakers, any major tax hikes might not be supported in Congress.
Republicans would surely show their reluctance to tax hikes, especially if they result in a repeal of former President Trump’s 2017 tax cuts. Plus, Democrats would hesitate to accept the idea as well.
Moderate Democratic Sen. Joe Manchin (W.Va.) said that repealing Trump’s tax cuts would be a “ridiculous” idea, but he later added that “Everything’s open for discussion.”
Last month, an anonymous Democratic House member told The Hill that the government should not be raising taxes. The lawmaker reportedly stated:
“People would accept the corporate tax raised a few points, but beyond that you’re going to have problems, especially in the middle of an economic crisis.”
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Source: Bloomberg
