Biden to unveil tax the rich scheme
$1.8 trillion Families Plan raises top rate
WASHINGTON • Joe Biden will mark his first 100 days in office by proposing a massive tax on America’s wealthy to fund multi-trillion dollar spending programs, setting up a battle with Republicans, Wall Street and Silicon Valley.
The U.S. president is expected to use his first speech to a joint session of Congress Wednesday night to detail his plans for increases in capital gains tax, corporation tax and income tax. Republicans have called the scheme “economic sabotage” while business figures said it threatened to “kill the golden goose.”
Biden will reach 100 days in office on Friday. In his speech he will set out his US$1.8 trillion American Families Plan to provide national child care, paid family leave and free community college. It comes on top of his proposed $2.3 trillion infrastructure bill, and his $1.9 trillion coronavirus relief package. The family plan will be partly paid for by increasing taxes on profits earned from shares and other investments such as property owned by Americans earning more than $1 million a year.
Some could see their tax rate on those investments roughly doubling to 43.4 per cent, the highest since the 1920s, according to the Tax Foundation, an independent research group.
The White House said the move would affect 500,000 people, or about 0.3 per cent of taxpayers. Biden’s infrastructure plan is to be partly funded by increasing corporation tax from 21 per cent to 28 per cent. He also plans to raise the top rate of income tax from 37 per cent to 39.6 per cent for those earning more than $400,000.
In addition, the president plans to clamp down on tax loopholes for the estates of wealthy families.
Ending “step up in basis,” which allows heirs to use the market value of assets at the time of inheritance rather than the actual purchase price as the cost basis for capital gains when the holdings are sold, would mean much higher tax bills for wealthy estates. The specifics of Biden’s measure aren’t yet clear.
He will also announce an increase of up to US$80 billion over 10 years in the budget of the Internal Revenue Service, allowing it to audit the taxes of wealthy individuals, raising hundreds of billions of dollars.
IRS chief Charles Rettig told lawmakers earlier this month tax evasion costs the United States US$1 trillion or more each year.
Republicans and business leaders have expressed opposition to increases and said a rise in capital gains tax will discourage private investment.
Kevin Brady, the leading
Republican on the House of Representatives tax committee, said: “This is another economic blunder. It punishes investment in local businesses.”
Chris Christie, the former Republican presidential candidate, said: “It is nothing more than income redistribution. It’s socialism.”
Biden faces potential opposition from moderate Democrats in the Senate, where the party’s majority is on a knife edge. Joe Manchin, the conservative Democrat senator from West Virginia, has objected to raising corporation tax to 28 per cent.
Population growth in the U.S. decelerated over the past decade to the second-slowest pace in history, the Census Bureau reported on Monday, after Donald Trump’s crackdown on immigration. The 10-year count estimated that 331 million people lived in the world’s third-most populous country on April 1, 2020.