The next spending initiative — which is expected to be even bigger, costing as much as $4 trillion — won’t rely on just government debt as a funding source and could include an increase in both the corporate tax rate and the individual rate for high-income earners, according to Bloomberg News, citing a person familiar with the matter.
The planned changes include: raising the corporate tax rate to 28% from 21%, raising the income tax rate on individuals earning more than $400,000, expanding the estate tax, creating a higher capital-gains tax rate for individuals earning at least $1 million annually and paring back tax preferences for so-called pass-through businesses.
The White House did not immediately respond to a FOX Business request for comment.
The proposed tax increases will mostly mirror Biden’s proposals during the 2020 presidential campaign, when he vowed to reverse former President Donald Trump’s 2017 tax cuts on “day one” of his presidency. That includes raising the rate paid by corporations and wealthy Americans and making the tax code more progressive.
Any tax increases included in the legislation would likely take effect beginning in 2022, Bloomberg reported, with some lawmakers wary of raising rates until the economy more fully recovers from the coronavirus pandemic.
An analysis of Biden’s tax plan conducted by the Tax Policy Center estimated it would raise $2.1 trillion in new revenue over a decade.
It’s unclear what other measures would be included in the proposal, but on the campaign trail, Biden emphasized the need for new infrastructure investments and measures to combat climate change, as well as ways to revitalize the manufacturing industry and revamp housing, education and health care.
Raising taxes will serve as a key test for the nascent administration as it navigates a 50-50 Senate in which moderate Democratic lawmakers like Joe Manchin of West Virginia and Krysten Sinema of Arizona play an outsized role.
The infrastructure proposal is sure to ignite a firestorm of criticism from Republicans, and possibly some moderate Democrats, who are worried about the exorbitant level of government spending.
Manchin said last week that he would block the infrastructure bill if the planned multitrillion-dollar measure does not garner support from any Republicans, but indicated he was open to raising taxes to pay for the bill. Otherwise, he said, the nation’s skyrocketing debt could trigger “a tremendous deep recession that could lead into a depression if we’re not careful.”
The legislation would be in addition to the $1.9 trillion relief plan that congressional Democrats are aiming to pass by mid-March, as well as the nearly $4 trillion in stimulus measures under former President Donald Trump.
The nation’s deficit totaled a record $3.1 trillion for the 2020 fiscal year, and the national debt more than $28 trillion.