Joe Biden’s $4 Trillion Tax Plan

Joe Biden’s $4 Trillion Tax Plan

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Plus: Senate sends coronavirus spending bill to Trump
Thursday, March 5, 2020

Senate Approves $8.3 Billion Coronavirus Funding Bill, Sending It to Trump

The Senate on Thursday passed a bipartisan $8.3 billion emergency spending package meant to speed funds to help the government’s response to the novel coronavirus outbreak.

The bill passed easily, by a 96-1 vote, with Sen. Rand Paul (R-KY) the lone vote in opposition. Paul had proposed an amendment to the package that would have cut foreign aid programs to offset costs of the coronavirus funding. The Senate set aside his amendment.

The emergency package, which passed the House Wednesday, now goes to the White House for President Trump to sign. Trump on Wednesday tweeted that the funding was “great news for our Health, our Economy, and our Nation!”

Biden Tax Plan Would Raise $4 Trillion — and Make High Earners Pay Much More: Analysis

Joe Biden’s tax proposals would generate about $4 trillion in new revenue over 10 years, with high-income households paying the lion’s share of the increase, according to a new analysis by the nonpartisan Tax Policy Center.

TPC’s revenue projection is higher than the Biden campaign’s own estimate of $3.2 trillion over a decade, and even more so than the Penn Wharton Budget Model’s estimate of $2.3 trillion.

No matter which estimate is used, it’s clear that Biden’s plan is far more aggressive than those offered by Democrats in past presidential elections and shows just how far the party has moved on the subject of taxes since President Trump signed a $1.9 trillion tax cut into law in 2017.

What Biden proposes:
  • Increase the corporate tax rate to 28%, up from the 21% imposed by the 2017 tax law. This would raise an estimated $1.3 trillion over 10 years.
  • Apply the Social Security payroll tax to incomes over $400,000, raising an estimated $962 billion.
  • Raise the tax rate on capital gains and dividends for households earning more than $1 million per year. Along with a tax on unrealized capital gains of more than $100,000 at death (excluding money bequeathed to surviving spouses and charities), this would raise an estimated $448 billion.
  • Roll back the 2017 tax cuts for households earning more than $400,000 per year, raising an estimated $432 billion.
  • Double the minimum tax on overseas profits, from 10.5% to 21%.
Who would pay more:
  • The top 1% of households would pay 74% of the increased taxes.
  • More broadly, the top 20% of households — those making more than $170,000 per year — would pay 93% of increased taxes.
  • Income taxes on the top 1% of earners would increase by 17%, or an average of $299,000 per year.
  • The very wealthiest taxpayers — the top 10th of the top 1% — would see their tax bills increase by an average of $1.8 million.

Individuals would account for about $2 trillion of the tax increase, with the other $2 trillion coming from higher taxes on businesses.

Who would pay about the same:
  • The bottom 80% of earners would see tax hikes of no more than 0.5%, mostly caused by businesses shifting their tax increases onto shareholders and workers.

Where the money would go: While the TPC analysis did not look at Biden’s spending proposals, the former vice president has called for increased Social Security benefits and an expansion of the public health care system, and he has proposed tax credits for a variety of issues, including family caregiving, electric vehicle purchases and student loan forgiveness.

Read the TPC analysis of Biden’s tax plan here.

Quote of the Day

“We have a patchwork quilt that's full of holes that’s our health care system and it is not well-designed for dealing with a public health crisis like this one.”

– Sabrina Corlette, a research professor at Georgetown University, in a story at The Hill looking at how the Trump administration’s efforts to ramp up coronavirus testing could result in unexpected medical bills for some patients.

Column of the Day: What Should a Coronavirus Stimulus Plan Look Like?

Michael R. Strain, director of economic policy studies at the American Enterprise Institute, argues in a Bloomberg column that fiscal stimulus measures may well be necessary to prevent a coronavirus-related economic slowdown — and that Congress should be planning a stimulus package now, even if the need doesn’t arise. He writes:

“If the coronavirus does keep workers at home and workplaces shut down — and, to be clear, there is no real evidence to suggest that it is hurting the economy at this point — then that supply-side disruption will end up reducing aggregate demand. Rate cuts alone won’t be enough to increase it. Fiscal stimulus measures will be required as well.”

Options include expanded unemployment insurance benefits, temporary payroll-tax cuts, infrastructure spending and providing financial assistance to states affected by the outbreak to prevent them from having to divert funds from other areas — though timing issues could hamper the effectiveness of tax changes and infrastructure spending, Strain says.

Congress could also help businesses experiencing supply-chain disruptions by giving them access to loans, Strain suggests — and President Trump could help by rescinding his tariff hikes and pledging to hold off on any new tariffs until the outbreak has ended.

“The U.S. is already running trillion-dollar deficits, which shouldn’t be increased unless there’s a real need to do so,” Strain says. “Much of this would only be necessary if economic growth is near or below zero due to the coronavirus epidemic.”

Read the full column at Bloomberg.

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Growing Number of Cities See Fiscal Trouble Ahead: Report

The Wall Street Journal’s Heather Gillers reports:

“The proportion of American cities expecting general-fund revenue to drop more than 3% when the books close on the 2019 fiscal year increased to 27% from 17% in fiscal 2018, when adjusted for inflation. That is one of the findings from a Wall Street Journal analysis of data collected from 478 U.S. municipalities by the National League of Cities, an advocacy group.”

“The total general-fund revenue reported by these cities—locales that span the U.S.—is expected to be lower in fiscal 2019 than in fiscal 2018, adjusted for inflation, the first such dip in seven years. Cities in the survey range in population from the low tens of thousands to the millions.”


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