Biden's Four Big Tax Hikes

Biden's Four Big Tax Hikes

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Plus - Surging approval of vaccine rollout
Tuesday, March 30, 2021

Biden’s Four Big Tax Increases

President Joe Biden is expected to unveil the infrastructure portion of his “Build Back Better” program on Wednesday, and administration officials have signaled that the proposal could cost upwards of $3 trillion over a decade.

The proposal will be “sweeping in scope,” the Associated Press reported Tuesday, and include plans to invest in physical infrastructure, green energy and domestic manufacturing, with an emphasis on remaining competitive with China. A separate proposal focused on issues including health care, paid leave and education will be released later this spring.

The infrastructure proposal reportedly will include sources of revenue to cover its costs. “The president has a plan to fix our infrastructure and a plan to pay for it,” White House Press Secretary Jen Psaki said. “The speech tomorrow is about making an investment in America, not just modernizing our roads or railways or bridges, but building an infrastructure of the future.”

Biden’s revenue foundation: While any number of potential tax increases to pay for the plan have been discussed and may make it into the president’s proposal, Biden is focused on four in particular, Axios’ Hans Nichols reported Tuesday. The tax priorities Biden is “preparing to go to the mat for” include:

  • increasing the corporate tax rate to 28% from 21%, which the Tax Policy Center says would raise $730 billion over 10 years;
  • establishing a new global minimum tax on foreign subsidiaries of U.S. corporations, raising $550 billion;
  • applying income tax rates to capital gains for wealthy households, raising $370 billion;
  • raising the top individual tax rate back to 39.6% for households earning more than $400,000 per year, raising $110 billion.

Nichols says that the White House will spend less effort promoting other proposals, including the idea of raising Social Security taxes on upper-income households, which could bring in an additional $740 billion. An increase in the estate tax could fall by the wayside, as could a plan to impose a minimum income tax on top earners.

A difficult path: Biden reportedly is aiming for approval of his plan by summer, giving Congress plenty of time to discuss the details and work toward an agreement on a bipartisan basis. The White House expects lawmakers to divide the spending program from the revenue proposals, the AP said, in order to ease the negotiation process.

Still, although the Biden administration is holding out for the possibility of a bipartisan deal, there are growing doubts that such cooperation will be possible given the divergent interests of progressives who want to go big on taxes and spending, moderates who fear going too far on either or both, and Republicans who have long been skeptical about big increases in government spending and are already lining up against any tax increases whatsoever.

New York Magazine’s Eric Levitz summed up the “seemingly impossible dilemma” that Democratic leaders must confront:

“If they cut the bill’s size, they alienate the progressives; if they debt-finance the package, they lose the Senate’s penny-pinchers; if they pay for it with tax increases, they antagonize Romney-Biden suburbanites ... And the mutually exclusive demands aren’t just coming from competing factions of the party; some Senate moderates are simultaneously calling for the infrastructure bill to include trillions in tax increases and win Republican support (which is a bit like asking for the legislation to repeal the Second Amendment and enjoy the NRA’s endorsement).

Senate Dems Push for Recurring Payments

Nearly two dozen Democratic senators including Finance Committee Chairman Sen. Ron Wyden (OR) are asking President Biden to include recurring direct payments and automatic supplemental unemployment benefits for millions of Americans in his “Build Back Better” plan.

“This crisis is far from over, and families deserve certainty that they can put food on the table and keep a roof over their heads,” the senators wrote. “While we are pleased that the American Rescue Plan included a one-time direct payment and an extension of federal unemployment insurance programs, a single direct payment will not last long for most families,” they added, referring to the $1,400 relief payments and temporary boost to unemployment benefits Biden signed into law earlier this month.

While some Democratic policymakers have long been pushing for automatic payments triggered by predefined economic conditions – for example, increased jobless benefits when the unemployment rate rises above a certain level – the 20 signatories on the letter to Biden suggests the idea is gaining support among lawmakers. Other senators signing the letter include Democratic Whip Dick Durbin of Illinois, Budget Committee Chair Bernie Sanders, Banking Committee Chair Sherrod Brown of Ohio, and Elizabeth Warren of Massachusetts.

Quote of the Day

“The clear and unambiguous upturn in U.S. Covid cases threatens to delay, but not to cancel, the economic recovery which is now underway and gathering steam.”

– Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note to clients.

Satisfaction With Vaccine Rollout Surges: Poll

In a remarkable turnaround from just a few weeks ago, a solid majority of Americans now say they are satisfied with the way Covid-19 vaccines are being distributed, according to a Gallup poll released Tuesday.

In a survey of 3,905 adults conducted March 15 to March 21, 68% of respondents said they were very satisfied or satisfied with the vaccine process in the country. A majority of Democrats (73%), Republicans (66%) and independents (63%) offered a positive assessment. Those over 65 reported the highest approval levels (77%), and even a majority of respondents who said they don’t plan to get vaccinated expressed satisfaction with the rollout.

In January, the survey numbers told a very different story, with just 34% of respondents saying they were happy with the vaccine situation. The overall approval level improved to 44% in February, setting the stage for the 24-point increase recorded in March.

Gallup noted that while partisan differences persist, the improvement in approval has been bipartisan. “Although the transition from a Donald Trump to a Biden presidency has resulted in partisans' views on many issues flipping, this has not been the case when it comes to satisfaction with the vaccination process,” the polling organization said. “Republicans' satisfaction, which was higher than Democrats' in January just after Trump left office, has increased 17 points to 66% since then.”

Biden Signs Extension of Small Business Loan Program

President Biden signed legislation Tuesday that extends the expiration date for the Paycheck Protection Program (PPP) from March 31 to May 31. The bill passed with bipartisan support in Congress earlier this month.

Created by the Cares Act a year ago, the PPP provides small businesses loans that can be forgiven if the money is used in specific ways, with an emphasis on keeping employees on the payroll. Congress has extended and added money to the program several times, with total funding now coming to about $806 billion.

The Small Business Administration, which oversees the program, says about $79 billion in funding remains.

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