The Joe Biden administration has announced plans to raise taxes by $3.6 trillion over the next 10 years.
According to political media The Hill and Bloomberg News, the US Treasury Department announced on the 28th (local time) a plan for tax reform, including future corporate and income tax increases.
This coincided with the announcement of the $6.1 trillion budget for fiscal 2022, and although the plan for tax increases has been reported occasionally in the media, this is the first time that the Biden government has unveiled a comprehensive plan.
The Biden administration's tax hikes are focused on the so-called "rich tax" through large corporations and high-income earners.
The top corporate tax rate for large corporations will be raised from the current 21% to 28%.
Bringing the Donald Trump administration's lower tax rate from 35% to 21% to an intermediate level is expected to increase tax revenue by $2 trillion over the next decade.
High-income tax increases to $700 billion over 10 years are also planned.
First of all, the tax rate for couples earning more than $500,000 a year and an individual earning more than $450,000 will increase from 37% to 39.6%.
President Biden has promised that he will not touch the tax rate for people earning less than $400,000.
In addition, the capital gains tax for individuals with capital gains of $1 million or more on assets held for more than one year will be significantly increased from 20% to 39.6%.
In addition, plans to increase tax revenue by $800 billion by improving tax compliance and by $64 billion in tax revenue by eliminating loopholes in the tax law are also being pursued.
The additional $3.6 trillion in tax revenue that President Biden will receive from infrastructure investments and education · It will be used to finance the expenditure of 4 trillion dollars proposed for the expansion of welfare.
This includes $1.2 trillion in tax credits for clean energy, electric vehicles, low-income families, and housing construction, and the actual increase in tax revenue is expected to reach $2.4 trillion.
The Treasury Department estimates that if the tax hike plan goes as planned, it will secure tax revenues equivalent to the $4 trillion in spending proposed by President Biden over the next 15 years.
The key is whether it passes Congress or not.
Republicans are of the view that President Biden's plan cannot accept $4 trillion in spending and tax reform as it is, as it will deepen the country's fiscal crisis and reduce the competitiveness of businesses and the country.
For example, Republican Senator Mike Crepo, who serves on the Senate Financial Services Committee, criticized the tax hike plan, saying it would "clamp the economy with regulation and bureaucracy."
There are also speculations that Democrats will mobilize a reconciliation process to deal with these bills on their own against Republican opposition.
This procedure has been consistently discussed as a means of bypassing the 'filibuster' of the Republican Party, which is an obstruction to the legal process of the Republican party in a situation where the Senate has 50-50 seats, unlike the House of Representatives, where Democrats have a majority.
The Democrats passed the bill through budget adjustments in March when Republicans met opposition to the $1.9 trillion coronavirus stimulus package.
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