In the wake of his $ 1.9 trillion coronavirus stimulus package, President Biden is planning the first major tax hike since 1993 to help finance infrastructure, climate and ongoing assistance to the poor of America, according to a report on Monday.
The boost could include an increase in the corporate tax rate and the individual tax rate for individuals earning more than $ 400,000 a year, among others, Bloomberg News reported.
The agency also said that the Biden government sees the rate adjustment not only as a way to fund projects, but also as an opportunity to control inequities in the economic system.
According to Bloomberg, the proposals currently under consideration by the White House include increasing the corporate tax rate from 21 percent to 28 percent, restricting tax preferences for “onlending businesses”, increasing the income tax rate to individuals earning more than $ 400,000, expanding property tax and a higher capital gains tax rate for individuals earning at least $ 1 million a year.
Last month, Treasury Secretary Janet Yellen signaled that a tax hike could be planned later this year as part of a legislative package.
She told CNBC that “it would involve spending and investing over several years” in measures such as infrastructure and education. “And probably tax increases to pay for at least part of that, which would likely be gradually progressive over time.”
While COVID’s stimulus plan is based on increasing government debt as a source of financing, any additional objectives will not, said the report.
But any meddling is fraught with political risks from lobby groups and constituencies that protect themselves against changing tax incentives or increasing tax rates and would encounter strong resistance from Republicans in Congress.
“His whole view has always been that Americans believe that tax policy needs to be fair, and he saw all of his policy options through that lens,” Sarah Bianchi, head of US public policy at Evercore ISI and former Biden’s economic adviser, Bloomberg said.
“That’s why the focus is on addressing the unequal treatment between work and wealth.”
To pass a bill in the 50-50 Senate, Democrats would need the votes of 10 Republicans under current rules – a huge increase in the face of Republican Party resistance.
“We will have a big and robust discussion about the appropriateness of a big tax hike,” said Senate minority leader Mitch McConnell (R-Ky.) Last month, predicting that Democrats would try to use reconciliation to approve any bills. of taxes as they did with the coronavirus relief plan.
The Biden government rejected a 3% income tax of more than $ 1 billion, as proposed by Sens. Elizabeth Warren (D-Mass.) And Bernie Sanders (I-Vt.), But still intends to target the rich.
The report also said the tax package would revoke parts of ex-President Donald Trump’s 2017 tax plan that benefited companies.
An analysis by the Tax Policy Center of Biden’s tax plan estimated that it would raise $ 2.1 trillion over the next 10 years, but is expected to be less.