Report: Biden planning first major tax increase in three decades
President Joe Biden is reportedly planning the first major federal tax increase in almost three decades to help bankroll the long-term economic program set up to follow his $1.9 trillion COVID-19 stimulus package he signed last week, unidentified people familiar with the matter told Bloomberg in a Monday report.
The reported plans would be the first major tax increase since President Bill Clinton‘s 1993 overhaul.
The tax hike proposals reportedly either under consideration or currently planned include: raising the corporate tax rate to 28% from 21%; raising the income tax rate on individuals making over $400,000; paring back tax preferences for pass-through businesses, such as limited-liability companies or partnerships; expanding the estate tax; and establishing a higher capital gains tax rate for people making at least $1 million annually.
On the campaign trail, Biden had said he would repeal former President Donald Trump‘s tax cuts on “day one” of his administration, though he has yet to follow through a little over 50 days after taking office. Since becoming president, much of his and Democrats’ attention have been on Trump’s second impeachment trial, COVID economic relief, Cabinet confirmations, among many other things.
Since Trump’s massive tax cuts were passed in 2017, something Republicans overwhelmingly consider a major achievement for the former president, the cuts have been the target of many Democrats’ ire, becoming a boogeyman of sorts for them. “[T]he worst bill in the history” of Congress, then-House Minority Leader Nancy Pelosi (D-Calif.) labeled the tax legislation in late 2017.
Seeing how Biden’s $1.9 trillion American Rescue Plan faced massive hurdles posed by moderate senators in his own party, in a chamber the Democrats control by the slimmest of margins, there are signs that a tax hike would face a rocky road to passage.
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West Virginia Sen. Joe Manchin (D), a moderate, told The Hill in January that repealing Trump’s 2017 tax cuts would be “ridiculous”. Though, as the publication noted, Manchin walked back his comments, saying, “Everything’s open for discussion.”
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Any tax hikes that are passed would likely take effect starting in 2022, according to Bloomberg, which pointed out that some lawmakers have urged the administration to hold off due to pandemic-related unemployment remaining high.
Late last month for example, Montana Sen. Jon Tester (D) warned that lawmakers ought to be careful about raising taxes when the real unemployment rate at the time was estimated to be as high as 10%, per The Hill.
“I think there are some loopholes in the code that could be cut out. I don’t know that you want to do it right now,” he said.
You can follow Douglas Braff on Twitter @Douglas_P_Braff.