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WASHINGTON — President Biden is turning to an effort to raise taxes on the rich. Trying to unite the Democrats He is behind a $3.5 trillion bill that will expand federal efforts to tackle climate change, reduce the cost of childcare, expand access to education, reduce poverty, and more in the House and Senate.
“I’m sick and tired of the super-rich and giant corporations not paying their fair share of taxes,” Mr. Biden said. wrote on Twitter Wednesday reinforces an argument that Democratic strategists believe will help sell its economic agenda to the public and potentially boost the party’s candidates in the midterm elections. “It’s time for a change.”
White House economists to support this argument Published on Thursday A new analysis that tries to show the gap between the tax rate Americans face every day and what the richest owe their vast wealth.
The analysis shows that the 400 richest households in America — those with net worth between $2.1 billion and $160 billion — pay an effective federal income tax rate of just over 8 percent per year on average. The White House bases this tax rate on calculations that use data on high-income income, wealth, and taxes paid from the Internal Revenue Service and the Federal Reserve’s Consumer Finance Survey.
The analysis from researchers in the Office of Management and Budget and the Council of Economic Advisers is an attempt to bolster Mr Biden’s claims that billionaires are not paying the amount they really should be owed in federal taxes and that the tax code rewards wealth. not working.
Understand the Law of Infrastructure
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- A trillion dollar package has passed. Senate approved comprehensive bipartisan infrastructure package On August 10, weeks of intense negotiations and debates over the country’s largest federal investment in more than a decade into the aging public works system will end.
- final vote. The final number in the Senate was 30 against 69. The law, which still has to pass the House, will touch nearly every aspect of the American economy and strengthen the nation’s response to the warming of the planet.
- Major spending areas. Overall, the bipartisan plan focuses on spending on transportation, utilities and pollution cleanup.
- Public transport. About $110 billion will go to roads, bridges and other transportation projects; $25 billion for airports; and $66 billion for railroads, giving Amtrak its largest funding since it was founded in 1971.
- Vehicles. Senators also included $65 billion aimed at connecting hard-to-reach rural communities. high speed internet and help sign up low-income city dwellers who cannot afford itand $8 billion for Western water infrastructure.
- pollution removal: Roughly $21 billion will go to cleanup abandoned wells and mines, and Superfund sites.
“While we’ve long known that billionaires don’t pay enough taxes, the lack of transparency in our tax system means that much less is known about the income tax rate they pay,” administration officials wrote in a budget blog post. The office accompanying the analysis was published.
The White House’s calculation of how much tax the richest pay is well below what other analyzes have found. The difference stems from White House officials’ decision to count the increased value of wealthy Americans’ stock portfolios (not taxed annually) as income. It finds that between 2010 and 2018, including the increased value of their wealth, these top 400 households earned a total of $1.8 trillion and paid an estimated $149 billion in federal individual income tax.
Most measures of tax rates do not use the White House method of counting asset gains as annuity.
Independent Tax Policy Center in Washington predicted this year In 2015, the country’s 1,400 highest-earning households paid an average effective tax rate of about 24 percent, compared to an average of 14 percent for all taxpayers.
White House economists — Greg Leiserson, senior economist on the Council of Economic Advisors, and Danny Yagan, chief economist in the budget department — have written that low tax rates calculations for very wealthy streams are for certain individuals, out of two types of preferential treatment. comes in the tax code. The federal government taxes income from wages at a higher rate than income from investments, and most wealthy households report a significantly larger share of capital gains and dividend income than typical taxpayers.
Biden’s 2022 Budget
The fiscal year 2022 for the federal government begins on October 1, and President Biden has announced how much he wants to spend from then on. But any spending requires approval from both chambers of Congress. Here is the content of the plan:
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- Ambitious total spend: President Biden wants the federal government to spend 6 trillion dollars In fiscal year 2022 and total spending rising to $8.2 trillion by 2031. This puts the US at the highest sustainable federal spending levels since World War II, while running a deficit of over $1.3 trillion over the next decade.
- Infrastructure plan: The budget outlines the first year of investment the president wants in his own budget. American Business Planaimed at financing improvements in roads, bridges, public transport and more $2.3 trillion in eight years.
- Families plan: The budget also addresses the other big spending proposal Biden has already made. American Families Planaiming to strengthen the United States social safety net by expanding access to education, reducing childcare costs and supporting women in the workforce.
- Mandatory programs: As usual, mandatory spending on programs like Social Security, Medicaid, and Medicare make up a significant portion of the proposed budget. They are growing as America’s population ages.
- Non-essential expenses: financing for individual budgets between agencies and programs It will reach nearly $1.5 trillion under the executive branch in 2022, an increase of 16 percent over the previous budget.
- Here’s how Biden will pay for it: The president would largely finance his agenda by: raise taxes on companies and high income earnersIt will begin to shrink its budget deficits in the 2030s. Administration officials said the tax increases would completely balance work and family plans for the 15 years supported by budgetary demand. Meanwhile, the budget deficit would remain above $1.3 trillion each year.
Mr Leiserson and Mr Yagan noted that “the wealthy may be able to avoid or even appear when their capital gains income will appear on their income tax returns.”
“If a wealthy investor never sells any increased stock, those investment gains are wiped out for income tax purposes when those assets are transferred to his heirs under a provision known as augmented basis,” they wrote.
Mr. Biden suggested that both of these tax practices be changed. It would raise the capital gains rate to match the rate paid on wage income. And it would eliminate the increased basic provision for wealthy heirs.
But Democrats in Congress have already pushed back both efforts. Home Roads and Means Committee approved a tax plan For this month’s spending bill, which leaves the augmented core provision intact and raises the capital gains rate much less than Mr. Biden suggested.
Administration officials did not make any predictions in their analysis or attached blog post about how much more tax the rich would pay if Mr. Biden’s full tax plan were implemented.
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