Campaigns hit final laps
Proposal would increase taxes on high earners, corporations
Trump, Biden go on offense in states they’re trying to flip.
At a drive-in campaign rally last week at a union hall in Toledo, Ohio, Joe Biden asked those in the audience to beep their car horns if they earned more than $400,000 a year.
“You’re going to get a tax raise,” he declared as some cars honked.
Biden, the Democratic presidential nominee, has proposed sweeping tax increases on high earners and large corporations, which various independent forecasting models project would raise around $2.5 trillion or more in revenue over a decade. In a rare case of agreement, both Biden and his incumbent opponent, President Donald Trump, have sought to elevate those tax plans in the closing weeks of the campaign.
The competing strategies reflect diverging views of how voters respond to tax increases — and of how those increases will affect a fragile economic recovery in the years to come.
Biden and his advisers say tax increases now would accelerate growth by funding a stream of spending proposals that would help the economy, like infrastructure improvement and investments in clean energy. At least one independent study supports those claims, finding that Biden’s full suite of plans would bolster economic growth. Researchers at some conservative think tanks project that his tax increases would exert only a modest drag on the economy.
Trump and congressional Republicans say otherwise, arguing that tax increases of any kind threaten to derail the rebound from recession.
“If he comes along and raises rates, all those companies that are coming in, they will leave the U.S. so fast your head will spin,” the president said Thursday during an NBC town hall event. “We can’t let that happen.”
A group of Trump’s former economic advisers released a study last week projecting steep losses in employment, wage and economic growth from the enactment of Biden’s agenda, including significant damage from a tax proposal that has drawn relatively little scrutiny in the campaign: Biden’s plan to lift the cap on wages subject to the payroll tax that funds Social Security. That move will raise money from high earners, but two of Trump’s former economic advisers say it will punish small-business owners and reduce hiring.
Polls show Americans largely support raising taxes on the rich. But Biden has faced mounting questions about whether, given the pandemic, he would delay his tax increases, which also include raising the corporate rate to 28 percent from 21 percent and increasing the rate on investment and labor income for high earners.
The questions have come largely from Republican critics but also arose during an ABC town hall event Thursday. Asked if it was wise to raise taxes on the wealthy and corporations now, in the middle of a weak economy, Biden replied, “Absolutely.”
Republicans have long asserted that any Democratic proposals to raise taxes would hurt the economy, regardless of whether it was booming or ailing. In recent years, including in the Democratic presidential primaries this year, Democrats and liberal economists have more forcefully argued the opposite: that raising taxes on the rich to fund government spending that bolsters the productivity of the U.S. economy will accelerate economic growth.
Economists advising Biden’s campaign from the outside say that they remain confident that his agenda will promote growth — and that Biden should not wait, if elected, to raise taxes on corporations and the rich.