President Biden on Thursday repeated his call for Congress to hike taxes to finance a $3.5 trillion social spending bill, saying it would “restore some sanity in fairness to our tax code.”
Biden didn’t offer new policy proposals but repeated his long-standing preferences to raise taxes on corporations and incomes over $400,000 — after House Democrats on Monday unfurled a plan to raise taxes on higher incomes, certain businesses and tobacco products.
“We’re making sure the corporations and wealthy Americans pay their fair share,” Biden said.
The president, who shielded his own book income from Social Security and Medicare taxes using a controversial tax loophole, said his plan “is about the super wealthy finally began to pay what they owe, what the existing tax code calls for.”
The House Democratic tax plan calls for a 39.6 percent tax rate for people who earn over $400,000 or married couples who earn $450,000 jointly — up from 37 percent.
The capital gains tax rate would increase to 25 percent — up from 20 percent — but that also would only impact incomes over $400,000.
The top corporate tax rate would increase to 26.5 percent — from 21 percent — for businesses earning over $5 million.
Republicans are unified in opposition to tax increases, which they say would slow the economic recovery from the COVID-19 pandemic.
Biden’s push to raise taxes to finance sweeping new social programs can’t afford to lose a single Democratic vote and Biden on Wednesday invited skeptical centrist Sens. Joe Manchin (D-WVa.) and Kyrsten Sinema (D-Ariz.) to the White House for talks.
Manchin and Sinema say the package is too large. If they force substantial spending cuts, that would undermine the justification for some of the tax increases.
The massive $3.5 trillion bill would make community college free to everyone and would create universal free preschool for 3- and 4-year-olds. It would cap childcare expenses for most workers at 7 percent of income and subsidize 12 weeks of paid family and medical leave.
It also would extend a temporarily expanded tax credit for parents — from $2,000 per year to $3,000, or $3,600 for children under age 6.
The bill can pass using special budget reconciliation rules with a simple majority in the Senate, where both parties hold 50 seats and Vice President Kamala Harris breaks ties.
House Democrats still need to pass a more narrow $1.2 trillion bipartisan infrastructure bill that already passed the Senate. House Speaker Nancy Pelosi (D-Calif.) has sought to use the bipartisan bill as leverage for pass the larger legislation.