On the heels of its $ 1.9 billion coronavirus stimulus package, President Biden is planning the first major tax hike since 1993 to help pay for infrastructure, climate and ongoing aid initiatives for America’s poor, according to a report Monday.
The boost could include an increase in the corporate tax rate and the individual rate for individuals earning more than $ 400,000 a year, Bloomberg News reports.
The outlet also reported that Biden’s administration considers the tax rate adjustment not only as a way to pay for projects, but also as an opportunity to control inequalities in the economic system.
According to Bloomberg, the proposals currently being considered in the White House include raising the corporate tax rate to 28 percent from 21 percent, and increasing the tax preferences for “do-it-yourself businesses”, raising the income tax rate on individuals earning more than $ 400,000. the estate tax, and a higher tax rate on capital gains for individuals earning at least $ 1 million a year.
Last month, Treasury Secretary Janet Yellen indicated that a tax increase could be on the map later this year as part of a legislative package.
She told CNBC that it would “involve spending and investing over a number of years” on measures such as infrastructure and education. “And probably tax increases to pay for at least a portion of it that is likely to slow down over time.”
While the COVID stimulus plan is based on increasing government debt as a source of funding, there will be no additional objectives, the report said.
But any involvement is fraught with political risks by groups and constituencies interested in protecting tax concessions or raising tax rates, and opposition from Republicans of Congress.
“His whole outlook has always been that Americans believe tax policy should be fair, and he saw all his policy options through the lens,” said Sarah Bianchi, head of U.S. public policy at Evercore ISI, and a former economic assistant to Biden . , told Bloomberg.
“That is why the focus is on treating the unequal treatment between work and wealth.”
To get a bill through the 50-50 Senate, Democrats would need the votes of ten Republicans under current rules – a fierce surge in the face of GOP resistance.
“We will have a big, robust discussion about the applicability of a big tax increase,” said Mitch McConnell (R-Ky.), Senate Minority Leader (R-Ky.) Last month, predicting Democrats would seek reconciliation. used to pass tax bills as they did with the coronavirus relief plan.
The Biden government has rejected a 3 percent tax on revenue of more than $ 1 billion as proposed by Sens Elizabeth Warren (D-Mass.) And Bernie Sanders (I-Vt.), But it still intends to to target the rich.
The report also said that the tax package would repeal parts of former President Donald Trump’s 2017 tax plan that benefited corporations.
A tax policy center analysis of the Biden tax plan has estimated that it will bring in $ 2.1 billion over the next ten years, but it is expected to be smaller.