WASHINGTON – President Joe Biden calls on Congress to raise taxes on wealthy Americans for the first time in nearly a decade to fund its ambitious $ 1.8 trillion plan to ease families and transform the US economy .
Biden’s American Families Plan, which sees billions of dollars invested in childcare, paid family vacations, and education, would nearly double capital gains tax to 39.6% for people who earn more than $ 1 million a year. The current rate is 20%.
The package also calls for the highest marginal tax rate to be raised to 39.5%, up from the current 37% in effect since a tax reform bill that Congress Republicans pushed through Congress in 2017. Biden’s proposal will bring the tax rate back to the US dollar level it was before the tax reform bill.
In addition to increasing taxes on the rich, the proposal also expands a number of tax credits that the administration says will provide the necessary relief for low- and middle-income families.
More:Biden prepared to negotiate with lawmakers over size and taxes for the $ 2.25 trillion infrastructure and employment plan
Biden is expected to set out his vision for the tax and spending proposal during a speech on Wednesday evening before a joint congressional session, his first address to the legislature since taking office as president.
A senior administration official who set out details of the package to reporters on Tuesday said the plan would ensure wealthy Americans pay the taxes they owe and keep Biden’s campaign promise that no one who makes less than $ 400,000 a year see that his taxes will go up.
The American Families Plan is the companion to a $ 2.3 trillion infrastructure and employment package called the American Jobs Plan, proposed by Biden earlier this month. Between the employment package and the family plan, Biden plans to spend more than $ 4 trillion – a figure he calls a one-time investment to restructure the American economy.
However, the implementation of the proposal by Congress could be the greatest challenge for Biden’s new presidency. Democrats have small majorities in the House of Representatives and the Senate, which gives them little room for political maneuvers in view of the expected strong GOP opposition to the plan.
If lawmakers have other ideas on how to pay for the package, Biden is “open to hearings,” the chief administrative officer said. However, the official said Biden believes that issues of tax justice and making sure people pay the taxes they owe are “fundamental and necessary”.
If approved, the package would be the first major tax hike for Americans since 2013, when then-President Barack Obama phased out earlier tax cuts for the rich.
More:“We Can’t Delay”: Biden proposes a $ 2 trillion infrastructure, an employment plan funded by a corporate income tax hike
The tax proposals that Biden is pushing as part of his infrastructure and jobs package and his American Families Plan proposal would remove tax cuts that former President Donald Trump and the Republicans of Congress enacted in 2017. Republicans have already objected to the tax hikes they are supposed to be paying for Biden’s plan.
Under the infrastructure and employment plan, the corporate tax rate would increase from 21% to 28%.
The separate package, designed to benefit families, would fill a number of long-standing loopholes that the government argues will reward wealth over work and increase racial disparities in income and wealth.
For example, current tax law allows wealthy Americans to avoid taxes on accumulated capital gains by keeping them until they die and then passing them on to their heirs tax-free.
Biden’s plan will fill that void and end the practice of so-called “base reinforcement” for profits in excess of $ 1 million. The change is designed to protect family businesses and farms and not have to pay the taxes when passed on to heirs, the chief administrative officer said.
More:Democrats are pressuring Biden to add Medicare expansion and prescription drugs to his American family plan
Biden also suggests providing the Internal Revenue Service with additional resources and powers over the next 10 years to combat tax evasion by wealthy taxpayers, large corporations, corporations, and estates. The government estimates that increased tax enforcement would raise $ 700 billion over the next decade.
In addition to raising taxes for the rich, Biden’s plan includes expanding tax credits that benefit low- and middle-income families.
A child tax credit, expanded under a $ 1.9 trillion COVID relief package approved in March, would be extended to 2025. The COVID bill increased the tax credit from $ 2,000 per child to $ 3,000 for each child age 6 and older and $ 3,600 for children under 6.
Tax credits, which families can use to lower health insurance premiums under the Affordable Care Act, and a temporary expansion of the child and dependent care tax credit that can be used to care for children under 13, would be extended permanently, Biden’s proposal.
Michael Collins reports on the White House. Follow him on Twitter @mcollinsNEWS.