The economy today

United States: tax clash between Biden and the super rich

Audio 03:37

US President Joe Biden is relaunching the super-rich tax bill.

© AP/Manuel Balce Ceneta

By: Anne Verdaguer Follow

3 mins

“ 

Tax the rich

 ”!

This is the new

credo

of US President Joe Biden.

And it does not please everyone: the boss of Amazon has criticized the tax policy of the White House.

In a

tweet

, Jeff Bezos denounces the mix of genres between the tax hike for businesses wanted by Joe Biden and the fight against inflation.

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"

It's misleading people, 

" wrote billionaire Jeff Bezos.

White House response: " 

It's not hard to understand why one of the richest people in the world opposes an economic program that asks the wealthiest taxpayers and corporations to pay their fair share

 " .

To understand this skirmish, you have to rewind a year ago, when House Democrats introduced a tax reform bill that included tax hikes for the wealthiest Americans and big corporations, reversing the tax cuts enacted in 2017 under Donald Trump.

I don't want to punish anyone's success

"

The corporate tax rate was then lowered from 35% to 21%.

Joe Biden then justified himself: " 

I don't want to punish anyone's success, but the rich have been benefiting for too long

 " from advantageous taxation, unlike the middle class.

But the tax reform, presented to Congress, had to be revised in the face of opposition to this reform project, including within the Democratic camp.

The White House returned to the charge a month ago with a new tax reform which proposes to apply a minimum tax rate of 20% to households whose fortune exceeds 100 million dollars and which targets in particular entrepreneurs who have made wealth in the stock market.

But the fate of this proposal remains uncertain, however, because it will at least have to be adopted by all Democrats and Congress in which Joe Biden has a very small majority.

And at this stage, none of the tax measures proposed at the start of Joe Biden's mandate have yet been adopted.

Inflation as number one priority

Since then, the situation has evolved.

US inflation hit 8.3% in April, and Joe Biden has made it his number one priority.

This poses a serious political problem for President Joe Biden and congressional Democrats with the midterm elections fast approaching.

Republicans say inflation won't be solved by raising taxes on the wealthy, but that Joe Biden's post-Covid financial relief package has overheated the economy by flooding it with stimulus checks.

Which artificially inflated the wallets of Americans.

At the end of 2021, the American economy was growing at 7% (annual rate), and created 6.7 million new jobs last year.

Unemployment has fallen almost as low as before the pandemic, at 3.8%.

The violent return of inflation therefore presents a significant risk of a reversal for US growth.

There is also the public debt which has increased by 30% in 2 years, and which has enabled the United States to regain its health.

But this hyper-stimulating policy of easy money and public spending without counting, since the pandemic, is today undermined by this explosion of inflation.

In reality, the Biden administration is counting above all on the Fed, the Federal Reserve, to tighten its monetary policy and raise its key rates.

This will have the announced effect of slowing consumption and investment.

► To read also: United States: the salaries of the big bosses are soaring, according to the Wall Street Journal

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