Biden's Four Big Tax Hikes

By Michael Rainey

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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