Biden Proposing First Major Tax Hikes Since 1993
Fresh off the passage of its $1.9 trillion “American Rescue Plan,” the Biden administration is readying a new, even larger package of spending initiatives on infrastructure, climate change, and more.
To pay for at least of a portion of all this new spending: a tax hike. According to Bloomberg’s Nancy Cook and Laura Davidson:
The following are among proposals currently planned or under consideration, according to the people, who asked not to be named as the discussions are private:
Raising the corporate tax rate to 28% from 21%
Paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnerships.
Raising the income tax rate on individuals earning more than $400,000.
Expanding the estate tax’s reach.
A higher capital-gains tax rate for individuals earning at least $1 million annually. (Biden on the campaign trail proposed applying income-tax rates, which would be higher)
An independent analysis of the Biden campaign tax plan done by the Tax Policy Center estimated it would raise $2.1 trillion over a decade, though the administration’s plan is likely to be smaller.
The hitch for Biden and congressional Democrats: they will need GOP support to pass anything through the Senate:
Democrats would need at least 10 Republicans to back the bill to move it under regular Senate rules. But GOP members are signaling they are prepared to fight.
“We’ll have a big robust discussion about the appropriateness of a big tax increase,” Senate Minority Leader Mitch McConnell said last month, predicting Democrats would pursue a reconciliation bill that forgoes the GOP and would aim for a corporate tax even higher than 28%.
The key item there: “regular Senate rules.” Democrats are already talking about ending, or at least substantially changing one Senate rule, the filibuster. Tax hikes could also be passed using reconciliation, which was used for the Rescue Plan.