- In the next part of his infrastructure package, Biden is looking to raise taxes on the wealthy.
- He’ll reportedly increase the income-tax rate for top earners and raise the capital-gains tax.
- These measures would target only those making $400,000 and above, The New York Times reported.
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President Joe Biden is planning to raise taxes on millionaire investors to fund childcare and education programs, according to a report from The New York Times.
Biden is set to reveal the American Family Plan, part of his $4 trillion overhaul of the US economy, before addressing Congress next week. But The Times reported that Biden’s proposal would not tackle healthcare.
In addition to tax increases, the plan will reportedly seek to extend through 2025 the expanded child tax credit, which gives American parents recurring cash payments and stands to substantially reduce child poverty. A four-year extension is not quite the permanent measure Democrats have been pushing for.
Biden’s tax increases would target the wealthy, though they wouldn’t be the same as a straightforward “wealth tax” proposed by some progressives.
Instead, the income-tax rate for the US’s highest earners could increase to 39.6%. Capital gains – profits made from selling assets like stocks – are taxed differently than income, often at a rate of up to 20%; Biden’s proposal is said to increase that to 39.6% for people who make over $1 million.
According to The Times, the proposal would also look to get rid of an aspect of the tax code that reduces taxes paid on assets that people inherit. That could be the stepped-up basis, where inheritors of an asset that’s become worth more over the time it’s held – like a house that’s increased in value – pay taxes only on the value of the asset when it’s inherited, not its gains over time.
Also reportedly under consideration are hikes to the estate tax and a cap on deductions that wealthy taxpayers can take. All told, the increases would target only those making $400,000 and above, according to The Times.
Biden is also looking to beef up the Internal Revenue Service, which could bring in more revenue through increased enforcement of wealthy taxpayers. A recent study by IRS researchers and economists that looked at the top 1% of taxpayers said that “collecting all unpaid federal income tax from this group would increase federal revenues by about $175 billion annually.”
IRS Commissioner Charles Rettig recently said in a Senate Finance Committee hearing that over $1 trillion in taxes could be going uncollected every year. Rettig also said increased funding – like the $1.2 billion increase in Biden’s “skinny budget” – could help the IRS increase its enforcement; over the past decade, its enforcement personnel have decreased by 17,000.