Biden’s spending plans rely on tax hikes on businesses and the wealthy
President Biden reiterated his pledge that no American earning less than $400,000 would not pay “a single penny” in additional taxes with a slight twist on Monday, after he proposed several tax increases to fund two sweeping spending plans.
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Biden appeared to mistakenly leave out a key word during his speech at Tidewater Community College – instead saying that no one earning under his specified threshold would pay any taxes.
“The reason I’m bothering to do this is I keep hearing in the press ‘Biden’s going to raise your taxes’ – anybody making less than $400,000 a year will not pay a single penny in taxes,” Biden said.
Last week, Biden unveiled his $1.8 trillion American Families Plan, which focuses on education and child care.
He previously announced the American Jobs Plan, a $2 trillion investment that includes a revamp of the nation’s infrastructure as well as various child care proposals.
Both spending plans rely on tax hikes on businesses and the wealthy for funding.
The American Jobs Plan includes an increase in the corporate tax rate to 28% from 21%, establishing a global minimum tax of 21% and eliminating various perceived loopholes in the corporate tax code.
The second proposal contains a number of increases on individuals and households, notably raising the top personal income tax rate to 39.6% from 37%.
The proposal would increase the capital gains tax rate for individuals earning more than $1 million to 39.6%, bringing it in line with the proposed top individual tax rate. Currently, short-term capital gains are taxed at the same rates as income, but long-term gains are taxed at lower rates.
Additionally, Biden wants to eliminate the stepped-up basis provision, which allows an individual who inherits assets or property from a decedent to sell it immediately and pay no tax. That is because the cost basis has been “stepped up” from the price the deceased owner originally paid for it to its fair-market value on the date it was inherited.
The loophole would be eliminated for gains in excess of $1 million.