Biden reportedly planning largest tax hike in almost 30 years
President Joe Biden is said to be planning the largest increase in federal taxes in nearly three decades to fund a long-term economic recovery program to follow in the footsteps of the recently passed $ 1.9 trillion stimulus package.
Unnamed sources confirmed the plans to Bloomberg News over the weekend, stating that the large tax hike – the first since 1993 – is expected to drive the Biden administration’s key initiatives such as “infrastructure, climate, and expanded assistance to poorer Americans.”
But the sources said the planned changes are not just designed to fund the administration’s key priorities. With the tax increase, the Biden team hopes to address what the Democrats argue are “disparities in the tax system itself.” According to a Bloomberg report, the changes include:
- Increase the corporate tax rate from 21% to 28%
- Reducing tax preferences for so-called passing businesses, such as LLCs or partnerships
- Raise the income tax rate for individuals whose income exceeds $ 400,000
- Expanding the scope of the real estate tax
- A higher tax rate on capital gains for individuals earning at least $ 1 million annually
“His whole view has always been that Americans believe tax policy should be fair, and he looked at all of his policy options through that lens,” Sarah Bianchi, a former Biden economic aide, told Bloomberg. “That is why the focus is on addressing the inequality of treatment between work and wealth.”
Bloomberg cited an independent analysis of the plan by the Tax Policy Center, which assessed that it would raise taxes on American citizens by $ 2.1 trillion over 10 years. The group originally expected the plan to raise taxes by $ 4 trillion over a decade, but revised its forecast last November.
The plans are not surprising because they come from the Biden administration and progressive Democratic lawmakers, who have already shown a willingness to raise taxes to achieve their political goals. Democrats seized $ 60 billion in tax increases in the Coronavirus Relief Bill even as the country faces persistent economic hardship as a result of the pandemic.
However, despite aligning with Biden’s campaign promises and the demands of progressive lawmakers, any major tax increases could face an uphill battle in Congress. Tax increases, especially if they lead to former President Trump’s 2017 tax cuts, are not a start for Republicans. Likewise, the moderate Democrats have shown some hesitation with this idea.
Moderate Democratic Senator Joe Mansheen (Virginia) previously told The Hill that canceling Trump’s tax cuts would be a “ridiculous” idea, although he later added, “Everything is open for debate.”
Then, last month, an anonymous Democratic member of the House of Representatives told The Hill that the government should not raise taxes.
The legislator reportedly said: “People will accept the corporate tax which raised a few points, but then it will face problems, especially in the midst of an economic crisis.”