Following on from his $ 1.9 trillion coronavirus stimulus package, President Biden plans the first major tax hike since 1993 to help pay for infrastructure, climate initiatives and continued aid to America’s poor, according to a report. from Monday.
The boost could include an increase in the corporate tax rate and individual rate for individuals earning more than $ 400,000 per year, Bloomberg News reported.
The outlet also reported that the Biden government sees the tax rate adjustment not only as a way to pay for projects, but also as an opportunity to manage inequalities in the economic system.
According to Bloomberg, proposals currently pending at the White House include increasing the corporate tax rate from 21 percent to 28 percent, limiting tax preferences for “ pass-through companies, ” increasing the income tax rate for individuals who are more more than $ 400,000, and it broadens estate tax and a higher capital gains tax rate for individuals who earn at least $ 1 million per year.
Last month, Finance Minister Janet Yellen indicated that a tax increase may be in the offing later this year as part of a legislative package.
She told CNBC it would “require spending and investment in a number of years” for measures such as infrastructure and education. “And probably tax increases to pay for at least some of it, which will probably be introduced slowly over time.”
While the COVID incentive plan was based on increasing government debt as a source of funding, any additional targets will not, the report said.
But any interference is fraught with political risk from lobby groups and constituencies guarding against changing tax breaks or raising tax rates and who would face fierce opposition from Congressional Republicans.
“His whole vision has always been that Americans believe that tax policy should be fair, and he has looked at all of his policy options through that lens,” said Sarah Bianchi, US chief of public order at Evercore ISI and former economic officer of Biden. Bloomberg said.
“Therefore, the focus is on tackling the inequality between work and wealth.”
To get a bill through the 50-50 Senate, Democrats would need the votes of 10 Republicans under current rules – a heavy lift in the face of GOP backlash.
“We will have a big, robust discussion about the appropriateness of a major tax increase,” Mitch McConnell (R-Ky.), Senate Minority Leader, said last month, predicting Democrats would try to use reconciliation to counter any tax bills. they did with the coronavirus aid plan.
The Biden government has rejected a 3 percent tax on incomes of more than $ 1 billion, as suggested by Sens. Elizabeth Warren (D-Mass.) And Bernie Sanders (I-Vt.), But she still plans to attack the rich.
The report also said the tax package would repeal parts of former President Donald Trump’s 2017 tax plan that would benefit businesses.
A Tax Policy Center analysis of Biden’s tax plan estimated it would bring in $ 2.1 trillion over the next 10 years, but is expected to be smaller.