The Biden presidency has announced new taxes on the wealthy will fund a portion of the Democrats’ infrastructure and social spending measures. Per the White House press release, there are surtaxes targeting affluent Americans among the list of tax code revisions released on Thursday morning.
According to the Washington Post, the White House proposes a 5% surtax on earnings above $10 million, with an additional 3% surtax on incomes above $25 million.
Additionally, according to the administration, the policy aims to address “lapses” that allow certain wealthy individuals to avoid paying a $3.8 Medicare surtax on their income, which is already in effect.
President Biden’s framework is fully paid for by asking more from the very largest corporations and the wealthiest Americans.
And no one making under $400,000 will pay a penny more in taxes. pic.twitter.com/rWvJ7C1PZP
— The White House (@WhiteHouse) October 28, 2021
Targeting Individuals’ Salaries, Not Just Their Wealth
The new tax plans target high-income earners’ salaries, rather than their wealth. As a result, they are fundamentally different from Sen. Ron Wyden’s suggestion to tax the unrecognized capital gains of approximately 700 of the world’s wealthiest individuals.
Wyden’s plan was being explored as a possible budget solution on Wednesday. Still, it seemed to be dismissed by senior Democrats in both the Senate and the House, only moments after it was announced.
In addition, the new model includes the implementation of a 15% country-by-country base tax on US firms’ international revenue. This is something critical deciding voter Sen. Kyrsten Sinema of Arizona previously expressed an interest in pursuing.
In addition, the concept would impose a 1% tax on corporate stock buybacks. The White House claims when taken collectively, the tax reform measures will generate approximately $2 trillion in savings and income, sufficient to pay for the social expenditure package.
It is uncertain whether the White House has the backing of every Democrat senator for the policy. Still, federal officials are confident the framework will pass both chambers of Congress and give them a victory, albeit a scaled-back one from the original $3.5 trillion idea.
A Day After Unveiling, Democrats’ Millionaires Tax Hikes are in Doubt
A Democrat initiative to tax millionaires’ unrecognized gains died on the same day. According to Bloomberg, the idea (which Sen. Ron Wyden has been working on for three years) was launched on Wednesday as a last-ditch effort to fund Democrats’ social and infrastructure spending package.
"The Billionaires' Tax Plan being floated by Senate Finance Committee Chair Ron Wyden is an excellent first step in getting the wealthiest Americans to pay something, after a century of nothingness," Edward J. McCaffery writes for @CNNOpinion https://t.co/jhvH6P6Ku5
— CNN (@CNN) October 27, 2021
The tax proposal was scrapped after West Virginia Democrat Sen. Joe Manchin announced he opposed it. Democrats can’t manage to lose just one vote in the evenly split Senate, so Manchin and Arizona’s Sinema will have to support the measure.
“I do not like it,” Manchin remarked. “Creating jobs, money, and giving to humanitarian causes are all good things, but I dislike the implication we’re targeting distinct people.”
The news of its nearly definite absence is a setback to Democrats who have been scrambling to find financial sources for the estimated $2 trillion spending bill.
However, Sinema stated she will not support raising the corporate, personal tax rates, or capital gains rates for rich individuals. While Sinema opposes raising the top corporate tax rate, she is open to a 15% base tax on corporate foreign revenues.
Changes in international taxation might raise over $100 billion, per the Tax Foundation, but that is far shy of what Democrats need to fully pay for their program.