Washington: US President Joe Biden is proposing a series of new tax hikes on billionaires, wealthy investors and corporations in his latest proposal on how Congress should prioritize taxes and spending.
Biden’s budget request to Congress, which is to be released on Thursday, calls for a 25% minimum tax on billionaires, according to a White House official familiar with the proposal, who has not yet been named public. The plan would nearly double the capital gains tax rate for investments from 20% to 39.6% and raise income taxes on corporations and wealthy Americans.
The proposal, which is largely a reprise of Biden’s multi-trillion dollar Build Back Better economic package, has little chance of passing Congress, especially now that Republicans control the House of Representatives. Biden was unable to pass a similar tax hike when Democrats, who enjoyed control of both chambers of Congress, instead vetoed legislation focusing on energy and health policy, known as the Inflation Reduction Act. Compromised for
But the White House proposal reflects Democrats’ strategy ahead of high-stakes talks on the debt ceiling and government spending later this year, as well as the economic platform underpinning an expected Biden reelection campaign.
Administration officials argue that the proposals show a commitment to reducing the deficit — estimating that Biden’s budget would make up a massive $3 trillion deficit over the next decade through increased revenue — and that of former President Donald Trump. The tax reform represents a politically popular return to tax levels prior to the law. , Taxes on the wealthy and large corporations have been a rallying cry for progressives for years and polls repeatedly show they are favored by a majority of Americans.
“I don’t believe raising taxes is the answer,” House Speaker Kevin McCarthy told reporters Wednesday.
The Biden proposal would require that the richest 0.01% of Americans pay at least a 25% tax rate. It would raise the top tax rate for Americans making less than $400,000 from 37% to 39.6%, reversing one of Trump’s tax cuts — though tax rates for those making less than that amount would remain untouched. It additionally seeks investors making at least $1 million to pay 39.6% on their long-term investments, which are currently taxed at a rate of 20%.
The proposal would raise the corporate tax rate from 21% to 28%, undoing another signature Trump tax change. It would also eliminate a loophole that business owners and high earners can take advantage of to avoid paying the levy on a higher portion of their income to the Medicare Hospital Insurance Trust Fund. White House officials have so far not indicated whether Biden’s budget includes new Social Security payroll taxes on salaries above $400,000, which some Democrats have proposed to shore up the program.
private equity, crypto
Biden is also calling for the elimination of valuable industry-specific tax breaks for private equity fund managers, oil companies, as well as investors in crypto and real estate in his upcoming budget proposal, according to a summary of the plan. Eliminating these would wreck the economics of many real estate and investment-fund deals — forcing Wall Street to rework the way many transactions have been conducted for decades — if they were to become law. .
Biden is proposing to eliminate the carry-interest tax break, which allows private equity managers and venture capitalists to pay lower rates on their earnings from the investments they make.
The Biden plan also ends a longstanding tax break for real estate investors, who can avoid paying capital gains tax on their profits if they continue to invest the proceeds in other properties.
The administration is also asking for an end to a break that allows crypto investors to sell their assets at a loss – generating huge tax savings – and then immediately repurchase those currencies.
In addition, all special tax preferences for oil and gas companies would be eliminated, saving $31 billion.
Biden’s budget request to Congress, which is to be released on Thursday, calls for a 25% minimum tax on billionaires, according to a White House official familiar with the proposal, who has not yet been named public. The plan would nearly double the capital gains tax rate for investments from 20% to 39.6% and raise income taxes on corporations and wealthy Americans.
The proposal, which is largely a reprise of Biden’s multi-trillion dollar Build Back Better economic package, has little chance of passing Congress, especially now that Republicans control the House of Representatives. Biden was unable to pass a similar tax hike when Democrats, who enjoyed control of both chambers of Congress, instead vetoed legislation focusing on energy and health policy, known as the Inflation Reduction Act. Compromised for
But the White House proposal reflects Democrats’ strategy ahead of high-stakes talks on the debt ceiling and government spending later this year, as well as the economic platform underpinning an expected Biden reelection campaign.
Administration officials argue that the proposals show a commitment to reducing the deficit — estimating that Biden’s budget would make up a massive $3 trillion deficit over the next decade through increased revenue — and that of former President Donald Trump. The tax reform represents a politically popular return to tax levels prior to the law. , Taxes on the wealthy and large corporations have been a rallying cry for progressives for years and polls repeatedly show they are favored by a majority of Americans.
“I don’t believe raising taxes is the answer,” House Speaker Kevin McCarthy told reporters Wednesday.
The Biden proposal would require that the richest 0.01% of Americans pay at least a 25% tax rate. It would raise the top tax rate for Americans making less than $400,000 from 37% to 39.6%, reversing one of Trump’s tax cuts — though tax rates for those making less than that amount would remain untouched. It additionally seeks investors making at least $1 million to pay 39.6% on their long-term investments, which are currently taxed at a rate of 20%.
The proposal would raise the corporate tax rate from 21% to 28%, undoing another signature Trump tax change. It would also eliminate a loophole that business owners and high earners can take advantage of to avoid paying the levy on a higher portion of their income to the Medicare Hospital Insurance Trust Fund. White House officials have so far not indicated whether Biden’s budget includes new Social Security payroll taxes on salaries above $400,000, which some Democrats have proposed to shore up the program.
private equity, crypto
Biden is also calling for the elimination of valuable industry-specific tax breaks for private equity fund managers, oil companies, as well as investors in crypto and real estate in his upcoming budget proposal, according to a summary of the plan. Eliminating these would wreck the economics of many real estate and investment-fund deals — forcing Wall Street to rework the way many transactions have been conducted for decades — if they were to become law. .
Biden is proposing to eliminate the carry-interest tax break, which allows private equity managers and venture capitalists to pay lower rates on their earnings from the investments they make.
The Biden plan also ends a longstanding tax break for real estate investors, who can avoid paying capital gains tax on their profits if they continue to invest the proceeds in other properties.
The administration is also asking for an end to a break that allows crypto investors to sell their assets at a loss – generating huge tax savings – and then immediately repurchase those currencies.
In addition, all special tax preferences for oil and gas companies would be eliminated, saving $31 billion.
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