Read my lips: yes, new taxes.
President Biden has explicitly vowed that Democrats will increase taxes on the wealthy, adding fuel to congressional Democrats’ plan to ram through higher taxes on party-line votes.
“Anybody making more than $400,000 will see a small to a significant tax increase,” Mr. Biden said in an interview that aired Wednesday on ABC. “If you make less than $400,000, you won’t see one single penny in additional federal tax.”
He doesn’t necessarily expect to win Republican support.
“I’ll get the Democratic votes for a tax increase,” the president said.
“He’s being blunt. He wants the money to spend,” said Grover Norquist, president of the low-tax, small-government activist group Americans for Tax Reform.
Democrats are rolling out a slew of tax plans now that they control the White House and both chambers of Congress. Whatever measures get pushed to Mr. Biden’s desk are expected to be the biggest tax increases since 1993.
Among other changes to the tax code, Mr. Biden wants to increase the corporate tax rate from 21% to 28%, lift the top individual tax rate from 37% to 39.6% and increase capital gains taxes on people with more than $1 million in annual income.
“Yet they’re complaining because I’m providing a tax credit for child care? For the poor? For the middle class?” Mr. Biden said.
One problem with Mr. Biden’s tax pledge is that the corporate tax rate increasingly hits the middle class indirectly through consumer prices, 401(k) retirement accounts and other ways, Mr. Norquist said.
“This is not going to be a fun thing to do. This is how he loses the suburbs,” he said. “You go and mess with everyone’s 401(k) and orange man isn’t on the ballot. How do you carry the suburbs with a declaration of war against everybody with a 401(k) as class enemies?”
Senate Republicans want no part in rolling back parts of the 2017 tax law, one of President Trump’s signature legislative achievements. Senate Democrats would have to use a fast-track budget tool to muscle their tax and spending plans through the 50-50 split Senate.
Senate Minority Leader Mitch McConnell, Kentucky Republican, warned that the Democrats’ infrastructure package would serve as a “Trojan horse” for tax increases.
“That’s exactly what I think they have in mind, is to call it an infrastructure bill,” he said on Fox News. “But, in fact, in it, they will have a massive tax increase to, in effect, reverse the tax reform that we enacted in 2017 when we had an entirely Republican government.”
Mr. Norquist led a group of dozens of conservative leaders who sent a letter to Congress voicing opposition to a carbon tax, which some lawmakers have floated as a way to pay for Mr. Biden’s multitrillion-dollar proposals on infrastructure and climate change.
A carbon tax imposed on the burning of coal, oil and gas would increase the costs of goods, lower take-home pay and increase “the power, cost and intrusiveness of the government in our lives,” the letter said.
Some congressional Republicans have supported a carbon tax in recent years as part of efforts to combat climate change, though the letter signers note that carbon taxes have fallen short in the revenue department and hit poorer people harder.
“Every place it’s been tried, it hasn’t worked. It doesn’t raise the money that they expect,” said Tom Schatz, president of Citizens Against Government Waste, who also signed the letter. “Any tax or policy that raises the cost of energy has a disproportionate impact on low-income families.”
Even apart from its regressive nature, some liberal Democrats have been critical of carbon taxes. They say the taxes are insufficient for what they see as an existential fight against climate change.
Lawmakers have talked about a “miles driven” tax or fee as another way to offset some of the costs of a far-reaching infrastructure and climate change proposal.
Congressional Democrats signaled that they are on board with Mr. Biden’s proposals and want to take them further.
Senate Budget Committee Chairman Bernard Sanders of Vermont rolled out legislation to tax CEOs if the ratio between their pay and the median employee pay at their company is too high.
“At a time of massive income and wealth inequality, the American people are demanding that large, profitable corporations pay their fair share of taxes and treat their employees with the dignity and respect they deserve,” said Mr. Sanders, a self-described democratic socialist.
Sen. Elizabeth Warren of Massachusetts has pushed her own “wealth tax” proposal, which would levy a 2% tax on net worth above $50 million and an additional 1% tax on net worth above $1 billion.
The White House didn’t dismiss Ms. Warren’s proposal out of hand, though press secretary Jen Psaki pointed out that Mr. Biden introduced his own tax proposals on the 2020 campaign trail.
Liberal economists say the Democrats’ upcoming “green infrastructure plan” that could cost up to $4 trillion shouldn’t necessarily be funded anyway.
“If a sizable portion of this plan is deficit-financed, as I believe current macroeconomic conditions warrant, then the green infrastructure plan could also ensure the economy is brought to true full employment,” said Mark Paul, assistant professor of economics at New College of Florida and a fellow at the Roosevelt Institute.