Biden's Tax Plan

[TGHusker]

Article quoted in part below.  With the passage of his # 1 priority, Covid relief bill, Biden turns his attention to infrastructure and other issues.  To be able to fund more govt spending, he will be looking at raising taxes.  His tax raises are similar to some of what Sen Elizabeth Warren has encouraged in the past but most likely will not be as aggressive as her progressive proposals.   Unless rules are changed in the Senate, Biden will need 10 GOP Senators to go along with his tax plans.  Will he get 10?- very iffy most likely not unless he gives them things the GOP wants. 

 

I believe the Era of Reagan is now officially over.  While his tax cuts of the 1980s were justifiable to rebound the economy, he also had targeted tax increases initiated as well.  The GOP erroneously used the historical turn around of the economy in the 1980s (as well as JFK's tax cuts) to justify tax cuts under GWB (while fighting 2 wars- bad idea) and under Trump (when the economy was already doing well and not needed).  It was inevitable that the pendulum would once again swing back to the raising of taxes.  This appears to be the time and the need is there. 

 

 

 

 

https://finance.yahoo.com/news/biden-eyes-first-major-tax-060001525.html

Quote

 

President Joe Biden is planning the first major federal tax hike since 1993 to help pay for the long-term economic program designed as a follow-up to his pandemic-relief bill, according to people familiar with the matter.

Unlike the $1.9 trillion Covid-19 stimulus act, the next initiative, which is expected to be even bigger, won’t rely just on government debt as a funding source. While it’s been increasingly clear that tax hikes will be a component -- Treasury Secretary Janet Yellen has said at least part of the next bill will have to be paid for, and pointed to higher rates -- key advisers are now making preparations for a package of measures that could include an increase in both the corporate tax rate and the individual rate for high earners.

With each tax break and credit having its own lobbying constituency to back it, tinkering with rates is fraught with political risk. That helps explain why the tax hikes in Bill Clinton’s signature 1993 overhaul stand out from the modest modifications done since.

 

For the Biden administration, the planned changes are an opportunity not just to fund key initiatives like infrastructure, climate and expanded help for poorer Americans, but also to address what Democrats argue are inequities in the tax system itself. The plan will test both Biden’s capacity to woo Republicans and Democrats’ ability to remain unified.

“His whole outlook has always been that Americans believe tax policy needs to be fair, and he has viewed all of his policy options through that lens,” said Sarah Bianchi, head of U.S. public policy at Evercore ISI and a former economic aide to Biden. “That is why the focus is on addressing the unequal treatment between work and wealth.”

While the White House has rejected an outright wealth tax, as proposed by progressive Democratic Senator Elizabeth Warren, the administration’s current thinking does target the wealthy.

The White House is expected to propose a suite of tax increases, mostly mirroring Biden’s 2020 campaign proposals, according to four people familiar with the discussions.

The tax hikes included in any broader infrastructure and jobs package are likely to include repealing portions of President Donald Trump’s 2017 tax law that benefit corporations and wealthy individuals, as well as making other changes to make the tax code more progressive, said the people familiar with the plan.

The following are among proposals currently planned or under consideration, according to the people, who asked not to be named as the discussions are private:

Raising the corporate tax rate to 28% from 21%Paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnershipsRaising the income tax rate on individuals earning more than $400,000Expanding the estate tax’s reachA higher capital-gains tax rate for individuals earning at least $1 million annually. (Biden on the campaign trail proposed applying income-tax rates, which would be higher)

White House economist Heather Boushey underlined that Biden doesn’t intend to boost taxes on people earning less than $400,000 a year. But for “folks at the top who’ve been able to benefit from this economy and haven’t been this hard hit, there’s a lot of room there to think about what kinds of revenue we can raise,” she said in a Bloomberg TV interview Monday.

An independent analysis of the Biden campaign tax plan done by the Tax Policy Center estimated it would raise $2.1 trillion over a decade, though the administration’s plan is likely to be smaller. Bianchi earlier this month wrote that congressional Democrats might agree to $500 billion.

The overall program has yet to be unveiled, with analysts penciling in $2 trillion to $4 trillion. No date has yet been set for an announcement, though the White House said the plan would follow the signing of the Covid-19 relief bill.

An outstanding question for Democrats is which parts of the package need to be funded, amid debate over whether infrastructure ultimately pays for itself -- especially given current borrowing costs, which remain historically low. Efforts to make the expanded child tax credit in the pandemic-aid bill permanent -- something with a price tag estimated at more than $1 trillion over a decade -- could be harder to sell if pitched as entirely debt-financed.

 

 

[Redux]

I'm just afraid any tweaks made at this point are going to be felt tenfold and then some 2yrs from now to recoup the amount of money we wasted NOT giving our own citizens a majority of that 1.9 Trillion Dollars.

[TGHusker]

More from Yahoo on this:

 

 

 

Quote

 

5 tax hikes that may be coming under Biden: strategist

 

With a $1.9 trillion stimulus plan now under his belt, President Joe Biden and his administration are reportedly eyeing several tax hikes to pay for a significant new infrastructure bill and help coral the ballooning U.S. deficit.

But getting tax hikes through even to support badly needed infrastructure investments will be a Herculean challenge, argues Stifel chief Washington policy strategist Brian Gardner.

"The politics of a tax bill are likely to be more challenging than the politics of passing an emergency spending bill. Most lawmakers like spending money and being seen as caring and empathetic during a health crisis. However, voting for a tax bill is not as popular since it could include hard choices for key industries and political supporters back home," Gardner says. "Given Democrats’ razor thin majorities in both the House and Senate, any dissension could be fatal to the bill."

That doesn't mean impossible, however.

Gardner lists several tax hikes that Congress and the Biden administration may pass in the currently polarized political climate. They include:

1. Raising the corporate income tax rate to 28% from 21%.

2. Doubling the global intangible low-taxed income rate to 21% from 10.5%.

3. Lifting the top tax rate to 39.6% from 37% for individuals making over $400,000.

4. Taxing capital gains as ordinary income (at a top tax rate of 39.6%) for those earning more than $1 million a year.

5. Hiking the estate tax rate to 45% from 40% for assets worth more than $1 million.

Interestingly, the market appears to be betting tax hikes of any kind are unlikely to happen or that they will happen so far off into the distance that riding optimism on the pandemic recovery makes better sense.

 

 

[TGHusker]

3 minutes ago, Redux said:

I'm just afraid any tweaks made at this point are going to be felt tenfold and then some 2yrs from now to recoup the amount of money we wasted NOT giving our own citizens a majority of that 1.9 Trillion Dollars.

Yes, according to  the GOP side, there appears to be a lot of 'waste' in that 1.9 Trillion .  I haven't taken the time to figure that out. 

 

American Enterprise Institute sees plenty of waste (article before they removed the $15 min wage clause)

 

https://www.aei.org/poverty-studies/1-9-trillion-stimulus-bill-is-latest-example-of-never-letting-a-serious-crisis-go-to-waste/

 

 

However, this chart tells the story of how the average person on the street benefited  from Trump's tax cut and Biden's relief bill -

https://www.washingtonpost.com/politics/2021/03/09/difference-between-trump-tax-cuts-biden-relief-bill-one-chart/

 

First the income categories as defined by the article:

 

 

Now a display on who benefited from the Trump tax cut and the Biden relief bill

 

[DevoHusker]

14 minutes ago, TGHusker said:

Interestingly, the market appears to be betting tax hikes of any kind are unlikely to happen or that they will happen so far off into the distance that riding optimism on the pandemic recovery makes better sense.

Yeah...if you could let me know when the market will turn the other way off into the distance...that would be great. (said in best Bill Lumbergh voice)

 

 

[TGHusker]

15 minutes ago, DevoHusker said:

Yeah...if you could let me know when the market will turn the other way off into the distance...that would be great. (said in best Bill Lumbergh voice)

 

 

Agreed - a heads up would be nice.

[BigRedBuster]

1 hour ago, TGHusker said:

I believe the Era of Reagan is now officially over.  While his tax cuts of the 1980s were justifiable to rebound the economy, he also had targeted tax increases initiated as well.  The GOP erroneously used the historical turn around of the economy in the 1980s (as well as JFK's tax cuts) to justify tax cuts under GWB (while fighting 2 wars- bad idea) and under Trump (when the economy was already doing well and not needed).  It was inevitable that the pendulum would once again swing back to the raising of taxes.  This appears to be the time and the need is there. 

 

This is a short and sweet description as to why tax cuts are not always great.  There are times when they are needed and justified.  There are times when they are not.  Republicans haven't figured out the difference.

[BigRedBuster]

21 minutes ago, DevoHusker said:

Yeah...if you could let me know when the market will turn the other way off into the distance...that would be great. (said in best Bill Lumbergh voice)

 

 

I know it seems like I'm harping on this.  But, it will be around when the government numbers start showing what our actual inflation is.

[DevoHusker]

1 minute ago, BigRedBuster said:

I know it seems like I'm harping on this.  But, it will be around when the government numbers start showing what our actual inflation is.

 

I agree with your assessment...now, get out the tarot cards and tell me when to move my 401k money 

[Archy1221]

Silly that they define $400,000 a year as wealthy.

 

it can you get you ahead in the game, but I don’t see it as wealthy, especially if you live in a high cost of living area 

[TGHusker]

1 minute ago, BigRedBuster said:

This is a short and sweet description as to why tax cuts are not always great.  There are times when they are needed and justified.  There are times when they are not.  Republicans haven't figured out the difference.

The pendulum swing that I mentioned in the OP - Reagan was at the apex of the swing of higher taxes - after the Great Society, Vietnam War, and inflationary recessions of the 1970s a new approach was needed.  However,  GWB and Trump's tax deductions were at a time when pressure was already being placed on the govt for increase revenue in the midst of new spending (wars and Great Recession). The pendulum had already bottomed out and was swinging up the other direction.  Trump's tax cuts I believe accelerated the pendulum to where we are now.  I'm not an economist (although I loved my Econ 101 & 102 classes in college which fit in nicely wt my History/Political Science courses), but many years of observation  makes me think that all of these events are cyclical and shouldn't be forced out of a blind allegiance of trying to codify either position into stone ( tax cuts or always tax) 

[TGHusker]

6 minutes ago, DevoHusker said:

 

I agree with your assessment...now, get out the tarot cards and tell me when to move my 401k money 

 

But I prefer this method of seeing - takes the guess work out of it:

 

[BigRedBuster]

33 minutes ago, TGHusker said:

Yes, according to  the GOP side, there appears to be a lot of 'waste' in that 1.9 Trillion .  I haven't taken the time to figure that out. 

 

American Enterprise Institute sees plenty of waste (article before they removed the $15 min wage clause)

 

https://www.aei.org/poverty-studies/1-9-trillion-stimulus-bill-is-latest-example-of-never-letting-a-serious-crisis-go-to-waste/

 

 

However, this chart tells the story of how the average person on the street benefited  from Trump's tax cut and Biden's relief bill -

https://www.washingtonpost.com/politics/2021/03/09/difference-between-trump-tax-cuts-biden-relief-bill-one-chart/

 

First the income categories as defined by the article:

 

 

Now a display on who benefited from the Trump tax cut and the Biden relief bill

 

 

It's frustrating when people put out charts like this but don't specifically describe who is in what group.  It should be simple to say the lowest is from 0 to 15,000 in income. Second is 15,000  to 25,000....etc.

 

Also, wouldn't the "top 1%" also be in the "Top"?

[TGHusker]

Just now, BigRedBuster said:

 

It's frustrating when people put out charts like this but don't specifically describe who is in what group.  It should be simple to say the lowest is from 0 to 15,000 in income. Second is 15,000  to 25,000....etc.

 

Also, wouldn't the "top 1%" also be in the "Top"?

The first chart does - broadly.  - most are under the 500k mark but you can only guess at the value based on the column length.  - But I agree - it would be more helpful to see the specifics  

[BigRedBuster]

1 minute ago, TGHusker said:

The first chart does - broadly.  - most are under the 500k mark but you can only guess at the value based on the column length.  - But I agree - it would be more helpful to see the specifics  

That's my point.  Why not be specific about it?  Looking at the chart, you can kind of guess that the "Top" is around 400,000.  But, what is the "Middle" or "Fourth"?

 

Also, the chart only shows the average for the group, right?

 

I guess what frustrates me is that I believe a lot of people would be surprised where they fit on this chart.  And, I think that would influence their opinions on the subject.