President Joe Biden is reportedly planning the first large-scale hike in federal taxes in nearly three decades to help fund a long-term economic program to follow the passage of the $1.9 trillion COVID-19 relief bill.
Sources familiar with the discussions told Bloomberg the Biden administration is planning on introducing tax increases similar to those included in the president’s campaign proposals.
The tax hikes are likely to reverse parts of President Donald Trump’s tax law from 2017, which benefited corporations and other wealthy Americans, among other changes.
According to the sources, the increases include: a raise in the corporate tax from 21% to 28%, paring back tax preferences for pass-through businesses including limited-liability companies or partnerships, an increase in the income tax rate for Americans making more than $400,000, an expansion of the estate tax’s reach, and the creation of a higher capital-gains tax rate for Americans making at least $1 million.
Bloomberg mentions an independent analysis by the Tax Policy Center indicates the Biden campaign’s tax plan would raise $2.1 trillion over the span of a decade. Bloomberg, however, notes the Biden administration’s plan is “likely to be smaller.” The publication suggests the plan, if approved, would likely take effect in 2022.
Republicans have expressed their determination to preserve Trump’s 2017 tax law, especially during the coronavirus pandemic.
Rep. Kevin Brady (R-TX), the top Republican on the House Ways and Means Committee said during a CNBC interview in January, “That’s going to have a significant impact in a bad way on our economy.”
Sen. Chuck Grassley (R-Iowa) said it would be a “big mistake” to “raise taxes on individuals and businesses as they struggle through an economic recovery and a pandemic.”
Treasury Secretary Janet Yellen said in a Senate testimony in January that the tax system “cannot be tilted toward corporate interests and the wealthy, while those that are sustained predominately by wages bear an unequal burden.”
She added, “Biden will require corporations and the wealthiest Americans to pay their fair share.”