To help pay the long-term economic program designed as a follow-up to his pandemic-relief bill, President Joe Biden is currently outlining the first major tax hike since 1993, according to sources familiar with the matter.
Sources also mentioned that compared to the $1.9 trillion COVID-19 stimulus act, the President's next initiative is expected to be bigger as it will not rely just on government debt as the source of the funds. And it has slowly become clear that there will be a hike on tax, and it will be a possible component.
First Major Tax Hike Since 1993
Moreover, according to Bloomberg, Janet Yellen, the Treasury Secretary, shared that at least a portion of the next bill will have to be paid for. She also pointed regarding higher rates as key advisers are now making preparations for a package of measures.
Also, for Biden's administration, the planned changes are an opportunity not just in funding key initiatives like infrastructure, climate, and expanded help for poorer Americans, but also to address what Democrats argue are inequities in the tax system itself. The tax hike plan will also test both Biden's capacity to woo the ability of Republicans and Democrats to remain united.
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The head of the United States public policy at Evercore ISI, Sarah Bianchi, who is also a former economic aide to Biden, shared that the U.S. President's whole outlook has always been that Americans believe tax policy needs to be fair. He has viewed all of his policy options through that lens. She also mentioned that the focus is on addressing the unequal treatment of wealth and work, The Hindustan Times reported.
Meanwhile, as the White House has rejected an outright wealth tax, as proposed by progressive Democratic Senator Elizabeth Warren, the administration's current thinking is targeting the wealthy. Based on several individuals familiar with the discussions, the Biden Administration is also expected to propose a suite of tax increases, mostly mirroring the new U.S. President's 2020 campaign proposals.
People familiar with the plan also stated that the tax hikes included in any broader infrastructure and jobs package are likely to include repealing portions of the 2017 tax law of then-President Donald Trump that benefits corporations and wealthy individuals as making other changes in making the tax code more progressive.
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The individuals, who asked not to be named as the discussions are private, shared that the proposals are raising the corporate tax rate to 28 percent from 21 percent, expansion on the reach of the estate tax, and raising the income tax rate on individuals who are earning more than $400,000. The mentioned proposals are only some of the things that they put into consideration, Fox Business reported.
On the other hand, earlier this month, Bianchi wrote that congressional Democrats might agree to a $500 billion raise. An independent analysis of Biden's campaign tax plan by the Tax Policy Center estimated that it would raise $2.1 trillion in over a decade. But the plan of the Biden administration is likely to be smaller.
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