President Biden is preparing the “first major federal tax hike since 1993” as a way of paying for a long-term economic plan, according to Bloomberg News.
“Unlike the $1.9 trillion Covid-19 stimulus act, the next initiative, which is expected to be even bigger, won’t rely just on government debt as a funding source,” Bloomberg News reported. “While it’s been increasingly clear that tax hikes will be a component — Treasury Secretary Janet Yellen has said at least part of the next bill will have to be paid for, and pointed to higher rates — key advisers are now making preparations for a package of measures that could include an increase in both the corporate tax rate and the individual rate for high earners.”
Sarah Bianchi, a former economic aide to Biden, told Bloomberg News that the increased taxes would be a way of “addressing the unequal treatment between work and wealth.”
“His whole outlook has always been that Americans believe tax policy needs to be fair, and he has viewed all of his policy options through that lens,” Sarah Bianchi said. “That is why the focus is on addressing the unequal treatment between work and wealth.”
Bloomberg News revealed that Biden’s upcoming tax plan includes “Raising the income tax rate on individuals earning more than $400,000” and “Raising the corporate tax rate to 28% from 21%.”
According to the Tax Foundation, a nonpartisan think tank, “the top 1 percent paid a greater share of individual income taxes (40.1 percent) than the bottom 90 percent combined (28.6 percent).” Biden’s plan would force the share of individual income taxes to become even more disproportionate.
Increasing the corporate tax rate would also cause the United States to have one of the highest corporate tax rates in the world. The Tax Foundation states that lowering corporate tax rates will “increase the size of the capital stock, and productivity, output, wages, and employment will grow.“ They also estimate raising the rate to 25%, which is less than Biden’s plan, “would shrink the long-run size of the economy by 0.87 percent, or $228 billion. This would reduce the capital stock by 2.11 percent, wages by 0.74 percent, and lead to 175,700 fewer full-time equivalent jobs.”