President Joe Biden is expected to announce a massive spending bill later this week focused on addressing “infrastructure needs,” and the multi-trillion-dollar piece of legislation, which follows closely on the heels of a nearly $2 trillion COVID-19 relief package, will likely require a major tax hike.
The Washington Post reported Tuesday that the Biden administration is exploring a major — $3 trillion — tax hike, mostly on wealthy Americans and corporations, and a near-complete rollback of President Donald Trump’s tax breaks.
“When President Biden’s team began putting together his infrastructure and jobs package this February, the White House National Economic Council circulated an internal proposal calling for about $3 trillion in new spending and $1 trillion in new tax hikes, according to three people with knowledge of the matter,” the Post reported. “The two-pronged package Biden will begin unveiling this week includes higher amounts of federal spending but also significantly more in new tax revenue — with possibly as much as $4 trillion in new spending and more than $3 trillion in tax increases, said the people, who spoke on the condition of anonymity to describe private dynamics.”
The Post notes that the $3 trillion number is just to start. The draft proposal “did not include every tax increase the White House was eventually considering including.”
“The tax increases would likely include raising the corporate tax rate from the current rate of 21% and higher levies on investment income, as well as a higher top marginal tax rate for top-earners,” Fox News reported, also Tuesday.
The tax hikes, Fox noted, are expected to come in two waves: “the infrastructure part of the bill would be funded by taxing corporations, including raising the corporate tax rate to 28%, increasing the global minimum tax paid from about 13% to 21%, ending federal subsidies for fossil fuel companies and forcing multinational companies to pay the U.S. tax rate rather than the lower rates offered by foreign subsidiaries.”
The second wave, “focused on domestic priorities” the outlet continued, “would be paid for by increasing the highest income tax rate from 37% to 39.6%, raising taxes on wealthy investors and limiting deductions that rich taxpayers can claim annually.”
Although the plan is being billed as an “infrastructure” bill, and as the second part of Biden’s COVID-19 recovery plan (the first was the $2 trillion “rescue” bill that passed in early March), Democrats are already competing to pack the spending initiative with pet projects on top of the Biden administration’s stated list of demands, which “include policies to combat climate change, as well as ways to revitalize the manufacturing industry and revamp housing, education, and health care.”
Speaker of the House Nancy Pelosi (D-CA) put out a call out to Democratic committee chairs in Congress on Friday “to begin crafting a ‘big, bold and transformational infrastructure package’ with their Republican counterparts, adding that she hopes a bipartisan ‘spirit will prevail’ to address critical needs in energy, broadband, education, housing, and utilities while creating jobs ‘in every zip code,'” per Forbes.
Congress will have all summer to debate the bill before it adjourns for its fall recess and the 2022 mid-term elections officially begin. Right now, the full plan is considered a hard sell for moderate Democrats, which Biden will need if he intends to shepherd the bill through the Senate, where passage relies on Sen. Joe Manchin (D-WV), Sen. Kyrsten Sinema (D-AZ), and other middle-of-the-road and maverick legislators.