Biden pursues tax hikes on rich
WASHINGTON >> The next phase of President Joe Biden’s $4 trillion push to overhaul the U.S. economy will seek to raise taxes on millionaire investors to fund education and other spending plans, but it will not take steps to expand health coverage or reduce prescription drug prices, according to people familiar with the proposal.
Administration officials had planned to include a health care expansion of up to $700 billion, offset by efforts to reduce government spending on prescription drugs. But they have decided to instead pursue health care as a separate initiative, a move that sidesteps a fight among liberals on Capitol Hill but that risks upsetting some progressive groups that have pushed Biden to prioritize health issues.
The president is set to outline his so-called American Family Plan before his first address to a joint session of Congress next week. Its details remain a work in progress and could change in the days before the announcement.
But after weeks of work, administration officials have closed in on the final version of what will be the second half of Biden’s sweeping economic agenda, which also includes the $2.3 trillion American Jobs Plan the president described last month. That plan focused largely on physical infrastructure spending.
The second phase centers on what administration officials call “human infrastructure.” It will spend hundreds of billions of dollars each on universal prekindergarten, expanded subsidies for child care, a national paid leave program for workers and free community college tuition for all. It also seeks to extend through 2025 an expanded tax credit for parents that was created on a temporary basis by the $1.9 trillion economic aid package Biden signed into law last month.
The family plan will also include some type of extension for an expanded Earned Income Tax Credit, which was included in the earlier aid package on a one-year basis.
The plan’s spending and tax credits will total around $1.5 trillion, according to administration estimates, in keeping with early versions of the two-step agenda first reported last month by The New York Times.
To offset that cost, Biden will propose several tax increases he included in his campaign’s “Build Back Better” agenda. That starts with raising the top marginal income tax rate to 39.6% from 37%. Biden would also raise taxes on capital gains — the proceeds of selling an asset — for people earning more than $1 million, effectively increasing the rate they pay on that income to 39.6%, from 20%. The president will also propose eliminating a provision of the tax code that reduces taxes for wealthy heirs who sell assets they inherit.