Topline
The Biden administration is expected to announce its American Families Plan before the president’s address to a joint session of Congress next Thursday, the Washington Post reported Monday—here’s what we know about the individual tax hikes that could potentially finance the package.
U.S. President Joe Biden speaks in the Oval Office of the White House on April 20, 2021 in … [+]
Key Facts
The Post reported that the American Families Plan, which will focus on childcare, paid leave and other elements of the “care economy,” could include $1 trillion in new spending, plus $500 billion in new tax credits and is expected to be paid for with tax increases on high income Americans and wealthy investors and heirs.
While the White House has not yet released any official details about its coming tax plan (and calls speculation “premature”), Biden’s campaign proposals offer clues to what may be around the corner.
The president is a proponent of raising the top income tax rate on ordinary income (like salary) from 37% to 39.7% and has advocated for tax hikes on the capital gains realized by the wealthy while limiting their deductions.
He’s also proposed expanding payroll taxes for those with income above $400,000 per year to bulk up the shaky financing of the Social Security program and pay for higher benefits for the program’s oldest beneficiaries.
He has advocated for returning the estate and gift tax rates to levels from 2009, when the top rate was 45% and the estate tax exemption was $3.5 million per individual, compared to the current $11.7 million.
He’s supported eliminating the so-called “step-up” in basis, which allows heirs to immediately sell appreciated assets they inherit without owing any capital gains tax and also taxing capital gains and dividends at the higher ordinary income rate for those with income above $1 million.
Crucial Quote
“Anybody making more than $400,000 will see a small to a significant tax increase,” Biden said in a March interview with ABC News. “If you make less than $400,000, you won’t see one single penny in additional federal tax.”
Key Background
As part of his $2+ trillion American Jobs Plan, Biden proposed a slew of corporate tax changes to help offset new government spending on physical infrastructure like roads and bridges and the American manufacturing industry. Those changes include a bump in the corporate rate from 21% to 28% as well as a 15% minimum tax on book income for the largest corporations, a 21% minimum tax on foreign income of U.S. companies and a push for a global minimum tax. Those changes have drawn criticism from Republicans as well as corporate groups like the Business Roundtable.
Big Number
57%. That’s the portion of Americans that said they’d be more likely to support Biden’s infrastructure plan if it were financed by tax hikes on Americans earning more than $400,000 per year, a recent Morning Consult poll found.
Tangent
The battle over tax hikes is playing out at the state level, too. Blue states like New York are pushing ahead with higher taxes on millionaires and billionaires, while at the same time red states like Ohio are suing the Biden administration to protect their right to cut taxes.
Further Reading
White House closes in on ‘families plan’ spending proposal centered on child care, pre-K, paid leave (Washington Post)
Who Will Be The Biggest Losers From Biden’s Tax Hikes? (Forbes)
98% Of CEOs Say Biden’s Corporate Tax Rate Hike Will Hurt Their Companies, According To Survey (Forbes)
The New Civil War: Blue States Soak The Rich; Red States Sue To Cut Taxes (Forbes)
