The White House said on the 15th that after the passage of the US$1.9 trillion new crown bailout bill, President Biden is planning a major increase in federal taxation for the first time in nearly 30 years, aimed at funding the next economic stimulus plan. Bloomberg analyzed that the tax increase plan will test Biden’s ability to win Republican support and maintain the unity of Democrats.
The White House Press Secretary Psaki told the media on the 15th that the White House will subsequently introduce an economic package that will implement Biden’s promises made during the 2020 presidential election. “The first priority is always to ensure that everyone’s tax payment is fair, while focusing on Companies that pay unfair tax rates”. A US think tank named “Tax Policy Center” believes that if the Biden administration implements the tax policy reform plan proposed during its election campaign, it is expected to generate up to $2.1 trillion in tax revenue in the next 10 years.
Bloomberg News quoted a source on the 16th as saying that the information currently disclosed shows that Biden is considering increasing the corporate tax rate levied by the federal government from the current 21% to 28% and expanding the scope of inheritance tax. The federal individual tax rate for individuals with an annual income of more than US$400,000 will also increase, and the capital income tax rate for individuals with an annual income of up to the threshold of US$1 million will increase. In addition, tax incentives for relevant companies may shrink. The above tax increase plan will be included in the subsequent economic package of the Biden administration. The last time the United States raised the federal tax rate substantially dates back to 1993, when Clinton, who was also from the Democratic camp, was in power at the White House. During the former U.S. President Trump’s administration, he implemented the largest tax cut in the United States in 30 years in 2017, reducing the corporate income tax rate from 35% to the current 21%. At that time, no Democrats voted in favor of Congress. It is expected that the Republican Party will also oppose any tax increase plan this time.
In addition, to push for the tax increase plan to pass the Senate vote, Biden needs to win the support of at least 10 Republican senators, but Republicans have already signaled that the Democrats may have a plan to increase taxes. Senate minority leader and Republican leader McConnell said last month: “If we want to increase tax rates substantially, we must talk about it!” Brady, a senior Republican member of the House Ways and Means Committee, said that the capital income tax rate will be increased significantly. It was a “terrible economic error.” Within the Democratic Party, the progressives represented by Senator Warren advocate levying the so-called “rich man’s tax,” but Biden does not agree with this proposition. The head of a US think tank called the “Federal Policy Group” said that the bipartisan struggle in the United States is more intense than in 1993 during the Clinton administration’s tax reform. Therefore, it is difficult to say whether the two parties can reach an agreement on a tax increase plan this year.