President Joe Biden said in an interview broadcast Wednesday that he plans to raise taxes on Americans making more than $400,000 a year as his post-stimulus legislative plans come into focus.
“Anybody making more than $400,000 will see a small to a significant tax increase,” he told ABC News. “If you make less than $400,000, you won’t see one single penny in additional federal tax.”
Speaking with NBC News, two administration officials earlier confirmed that Biden and his top aides are discussing the framework to increase taxes on Americans making more than $400,000 and on large corporations. Bloomberg was the first to report the news.
The officials stressed that the full scope of the package has not yet been finalized. Tax increases could be passed to help finance future Biden initiatives, such as a major infrastructure plan.
During the campaign, Biden pledged to at least partially roll back elements of former President Donald Trump’s tax cuts. A White House official told NBC News that Biden’s campaign proposals serve as a starting point for such a package.
- Increasing corporate tax rate to 28 percent (The Trump tax cuts slashed it from 35 percent to 21 percent).
- Restoring the top individual income tax rate to 39.6 percent. (Trump’s tax plan cut this rate to 37 percent.)
- Taxing investment income for millionaires at the top income tax rate.
- Imposing a minimum 15 percent tax on “book income” for large companies like Amazon that currently pay little or no taxes.
- A mix of tax penalties and new minimum taxes on foreign earnings of U.S. companies, including those that offshore American jobs.
- Tax credits for caregiving and first-time homebuyers.
“If you notice the criticism of the Covid relief package from my Republican friends, is they say it spends too much money and it gives too many tax breaks,” Biden told ABC News. “All these tax breaks go to the bottom 60 percent of the population. And guess what? They need it. The $1,400 check, (the) Child Care Tax Credit. They don’t like it because in fact, their idea of a tax cut is to give the Trump tax cut, where 83 percent went to the top 1 percent of people in America.”
Yet, with a 50-50 split in the Senate and a slim Democratic majority in the House, passage of a tax increase could be a struggle. Like the stimulus bill, it is likely to be advanced through the budget reconciliation process that requires just a 51-vote majority in the Senate — the same process utilized by Republicans to pass Trump’s tax agenda and recently by Democrats to pass Biden’s Covid-19 stimulus package.
Democrats are largely supportive of raising taxes. Sen. Ron Wyden, D-Ore., chairman of the Finance Committee, plans to unveil two tax hike proposals next week. One would overhaul multinational corporate taxes and the other would treat capitol gains like income, a tax structure that currently benefits the wealthy.
“Rebuilding our economy so it works for all Americans, not just mega-corporations and billionaires, starts with fixing our broken tax code and requiring they pay their fair share,” Wyden said in a statement.
The tax hikes are expected to help pay for a large infrastructure bill that Democrats are beginning to formulate.
Still, a tax increase is certain to face fierce opposition from Republican lawmakers who argue, in part, any increase in rates could cause businesses to move overseas and could hurt the economy in the long run.
“I think the Trojan horse will be called infrastructure but inside the Trojan horse will be all the tax increases,” Senate Minority Leader Mitch McConnell, R-Ky., said. “They want to raise taxes across the board.”
By one estimate, the president’s tax proposals as outlined could raise more than $2 trillion in revenue over the next decade.
“Oh, I may not get (Republican support), but I’ll get the Democratic votes for a tax increase,” Biden said. “If we just took the tax rate back to what it was when Bush was president, top rate paid 39.6 percent in federal taxes, that would raise $230 billion. Yet they’re complaining because I’m providing a tax credit for child care? For the poor, for the middle class?”
Mike Memoli, Peter Alexander and Leigh Ann Caldwell contributed.