President Biden on Wednesday unveiled his sweeping tax-hike agenda ahead of a speech in Pittsburgh to promote his $2 trillion plan
President Biden on Wednesday unveiled his sweeping tax-hike agenda ahead of a speech in Pittsburgh to promote his $2 trillion plan for infrastructure legislation — which includes plans to hit upper-middle-class earners with new hikes.
The White House branded the hikes as a “Made in America Tax Plan” ahead of what’s likely to be a bitter partisan fight in Congress.
One tax increase would boost the corporate tax rate from 21 percent to 28 percent, partially repealing a steep drop in taxes on companies adopted in 2017 by former President Donald Trump and the then-Republican-led Congress.
Another would tax companies’ overseas profits.
And Biden is expected to push for a part of taxes that will hit upper-middle-class and wealthy Americans.
“Alongside his American Jobs Plan, President Biden is releasing a Made in America Tax Plan to make sure corporations pay their fair share in taxes and encourage job creation at home,” the White House said in a morning fact sheet.
“President Biden believes that profitable corporations should not be able to get away with paying little or no tax by shifting jobs and profits overseas. President Biden’s plan will reward investment at home, stop profit shifting, and ensure other nations won’t gain a competitive edge by becoming tax havens.”
The corporate tax was lowered from 35 percent to 21 percent under Trump by Republicans who argued it would bring the US in line with competitors’ tax rates and help businesses grow.
Another tax change would apply a new tax on foreign subsidiaries of US companies.
“Right now, the tax code rewards U.S. multinational corporations that shift profits and jobs overseas with a tax exemption for the first ten percent return on foreign assets, and the rest is taxed at half the domestic tax rate,” the White House fact sheet says.
“Moreover, the 2017 tax law allows companies to use the taxes they pay in high-tax countries to shield profits in tax havens, encouraging offshoring of jobs. The President’s tax reform proposal will increase the minimum tax on U.S. corporations to 21 percent and calculate it on a country-by-country basis so it hits profits in tax havens. It will also eliminate the rule that allows U.S. companies to pay zero taxes on the first 10 percent of return when they locate investments in foreign countries.”
The fact sheet did not include clarification of the White House’s often-repeated proposal to increase the tax rate on the highest-earning individual income bracket or to boost capital gains taxes to match ordinary income tax rates, including when a person dies.
Axios reports that the higher corporate tax rate would yield $730 billion over 10 years according to the Tax Policy Center. The tax on foreign subsidiaries would net an estimated $550 billion. The hike on capital gains would earn the government about $370 billion and the hike on the highest income bracket from 37 percent to 39.6 percent would garner $110 billion.
How exactly the higher-bracket tax hike would work is unclear. White House Press Secretary Jen Psaki recently clarified it could apply to families earning $400,000 per year, meaning two adults who make $200,000.
Biden’s infrastructure plan “will invest about $2 trillion this decade. If passed alongside President Biden’s Made in America corporate tax plan, it will be fully paid for within the next 15 years and reduce deficits in the years after.,” the White House release said.