President Biden on Thursday proposed a series of new taxes on business and the wealthy, arguing it was time to end the era of the “trickle-down economy.”
After months of negotiations and delays, Mr Biden announced the tax increases under his long-standing $ 1.75 trillion social protection and climate change bill. Taken together, the deal poses a “really substantial” reorganization of the company, the president said.
“We have to build America from the bottom up and from the middle out, not from the top down with the fallout economy that has always failed us,” Biden said. “All I ask is to pay your fair share. “
The proposal represents one of the most significant tax increases in recent history. The tax increases are expected to affect businesses and high net worth individuals.
Overall, the White House estimates the changes would generate more than $ 1.9 trillion in federal revenue over the next decade.
One of the most important new sources of income would be a 15% corporate income tax. It is estimated that it will raise $ 325 billion over 10 years, although this figure has yet to be independently verified.
The flat rate of 15% would apply to companies that publicly report more than $ 1 billion in profits over three years. This would affect the profits of more than 200 US companies.
Senate Finance Committee Chairman Ron Wyden, Democrat of Oregon, said the proposal aims to ensure that big companies, such as FedEx and Nike, pay their fair share of taxes.
“The country’s most profitable companies are often the worst offenders when it comes to paying their fair share,” Wyden said. “Year after year, they bring in record profits to shareholders and pay little or no tax.”
The minimum profit tax is coupled with a 15% foreign profit tax for corporations. Experts say the foreign income penalty is aimed at preventing companies from shipping American jobs overseas. Administration officials estimate it would raise $ 350 billion.
Likewise, Biden plans to impose a 1% surtax on companies that repurchase their shares rather than investing directly in their companies. The surcharge, according to estimates by White House officials, would raise $ 125 billion over the next decade.
In addition to corporate tax hikes, the White House offers a menu of taxes on the rich.
“I can’t think of a single time when the middle class did well but the rich didn’t do very well,” Biden said. “I can think of many times, including now, where the rich and the super rich are doing very well and the middle class is not doing well. “
To try to change that, Mr Biden is backing a 5% “wealth tax” on people with adjusted gross income above $ 10 million.
The figure climbs to 8% on adjusted gross income above $ 25 million. It is expected to raise $ 230 billion over the next decade.