Biden’s Tax Plan
Everyone has heard by now that Joe Biden’s stimulus package has passed – and it cost the nation a whopping $1.9 trillion. Now, word is spreading throughout the capital of his plans for the next relief package, which is said to already be in the works. Preliminary reports suggest the next stimulus could cost up to $4 trillion. Unfortunately, the country cannot simply print this money and call it a day. So where will this money come from?
Joe Biden has big plans to make this money back, and unfortunately, America will be on the hook for it via taxes. This was summed up nicely by Sarah Bianchi, one of Biden’s former economic aides who said that Biden’s “whole outlook has always been that Americans believe tax policy needs to be fair...that is why the focus is on addressing the unequal treatment between work and wealth.”
Many of the president’s planned tax increases are similar to what he pitched during his presidential campaign, during which he made it clear he would undo or reverse the cuts that Donald Trump offered in 2017.
The majority of these changes will not affect the average American at surface level. The first initiative is the increase in corporate tax rates by a third, from 21% to 28%. This appears to only harm businesses and their profits, but a bit of thought reveals the trickle down harm it will have on everyday citizens. When corporations begin losing profits, they start making cuts. Often they will cut corners with manufacturing, resulting in flawed products, which can endanger consumers. The inferior products could also malfunction or break more often, which will lead to more frequent or higher out of pocket costs for repairs or replacements. Perhaps the worst scenario of all would be corporations outsourcing for cheaper production, or cutting personnel rather than cutting corners, and countless Americans being out of jobs.
Beyond the corporate tax hike, Biden’s plan would see many tax changes to the individual American. Most of them target the independently wealthy. Income taxes would increase on individuals who earn more than $400,000. The estate tax would be expanded. Capital-gains tax rates would increase for those earning $1 million or more annually. Finally, back taxes for “pass-through businesses” would face reform.
This has not yet officially passed, and thankfully it is not likely to with Republicans having a slight majority in the Senate. Many representatives already worry about the unprecedented highs in government spending – as the national debt soared past the $28 trillion mark after a $3.1 trillion deficit in 2020 – and would likely not want to see another $4 trillion tacked on to the red.
Joe Manchin, a center-left Democrat from West Virginia cites his worries. He remains open to the idea of raising taxes, but only should a bill of that nature receive bipartisan backing. Otherwise, he worries for a “tremendous deep recession” that might create “a depression if we’re not careful.” Joe Biden came into office saying that he valued the opinion of both parties and that he would not do anything without bipartisan support but it is now evident that was false information.
If passed, this would be the largest tax increase since Bill Clinton’s reforms introduced in 1993. Economists and analysts project the plan will pull in over $2 trillion in ten years’ time. The plan would likely not be put into play until 2022, once the economy has begun to appropriately recover and adjust after the coronavirus pandemic.