Biden is set to announce $3TRILLION in tax hikes tomorrow: President will target businesses, married couples, high earners on more than $400k, and estates to fund his climate-friendly infrastructure package
* Biden is set to announce his infrastructure plan Wednesday in Pittsburgh
* Total price tag has been pegged at between $3 trillion and $4 trillion
* The administration is working on hikes that could make up $3T of the package
* Biden says families earning less than $400,000 won't get tax hit
* But he is set to target business, married couples and estates
* The White House has backtracked on plans to tax drivers by the mile
* Individuals filing jointly could still get hit, one tax expert says
* Move to take on 'stepped up' basis for capital gains on investments
* White House said Biden would propose paying for proposals 'over time'
President Joe Biden is set to announce up to $3trillion in tax increases targeting the rich and middle class when he unveils his infrastructure package in Pittsburgh tomorrow.
The hikes could hit Americans earning more than $400,000 a year, businesses, married couples and estates.
It is part of his bid to fund the revenue needed for his bold proposal to pay for new roads, bridges, green technology and 'human infrastructure' - which includes subsidies for Americans to pay for health insurance and measures to cut child poverty.
But the White House is not drawing a line in the sand over Biden's tax hikes – and even allowing for the possibility the package that moves through Congress not be fully paid for.
'The president believes its responsible to propose a way for paying over time,' White House press secretary Jen Psaki said Tuesday.
'There will be a range of views including how to pay for it. 'Some people may not want to pay for it,' she noted, adding that Biden is 'open to having those discussions.'
Psaki held back details about what exactly Biden would propose. 'He believes that there’s more that can be done to make the corporate tax code fair – to reward work, not wealth,' she said.
While the White House will put out details on paper, Biden's role will be 'laying out ... a broad vision ,a bold vision for how we can invest in America .'
The increases could total $3 trillion, the Washington Post reported, with the cost of the infrastructure package running as high as $4 trillion. The rest of the money needed could be made up by borrowing.
One substantial hike that Biden campaigned on is raising the corporate tax rate to 28 per cent, from 21 per cent. Trump signed legislation dropping the rate to its present level from 35 per cent.
Biden has pledged that families earning less than $400,000 would not have their taxes raised, and White House Press Secretary Jen Psaki said this would apply to individual filers as well.
But tax expert Timothy McGrath of Riverpoint Wealth Management told Fox Business there could be scenarios would individuals making less than $400,000 do get hit if they file taxes jointly with their spouse.
Two individuals each earning $200,000 could get pushed into the top bracket, with the top rate rising to 39.6 per cent.
'It's a significant disadvantage to married couples,'McGrath said. 'It's another marriage penalty, and this is nothing new in the tax system.'
Another potential pay-for would get at the 'stepped up' basis for investments that go into estates. Under current law, long-held investments that get transferred at the time of death are only taxed when sold, and the new basis for taxation is set at the higher level at the time of death – potentially shielding millions worth of gains.
A new draft proposal floated by Sen. Chris Van Hollen (D-Md.) would shield the first $1 million, but the rest would be subject to taxation, the Wall Street Journal reported.
Some tax ideas are dying just days after getting floated by the administration – a reminder of the difficulty getting any of the proposals through Congress.
Transportation Secretary Pete Buttigieg touted a potential mileage tax last week to fund road improvements, only to say it wasn't being considered for the infrastructure package.
The White House also rejected those ideas.
A gas tax is politically risky and would weigh more heavily on lower-income Americans, who often travel longer distances for work.
House Democratic centrists, meanwhile, are making a play to raise the $10,000 cap on deductions for State and Local Taxes imposed by the Trump tax legislation. This would add costs to tax and infrastructure legislation.
Rep. Josh Gottheimer (D-N.J.) has already threatened not to go along with any tax legislation that doesn't take care of the issue, which hits homeowners in states like his with high property values. Given Speaker Nancy Pelosi's tiny majority, Gottheimer and his allies have leverage.
'No SALT, no dice,' he told Axios this week.
White House aides say that Biden may also rely on some federal borrowing to fund the package, given historically low interest rates.
Whatever the plan, it is likely to inspire heated debate among Republicans, Democrats, economists and academics about the right way to plug the holes in the U.S. economy opened by the vast spread of COVID-19.
'The president has a plan to fix the infrastructure of our country... and he has a plan to pay for it,' White House press secretary Jen Psaki said on Monday. If members of Congress don´t like it, 'we´re happy to look at their proposals,' Psaki added.
The nation's nearly 50,000 miles of interstate highways were considered one of the world's cutting-edge infrastructure projects when they were constructed.
But the national piggy bank for funding road and mass transit projects since 1956, the Highway Trust Fund, has been in the red since 2008.
Congressional budget forecasters warn it could have a $207 billion shortfall by 2031 without new sources of revenue.
The fund is powered by an 18.4 cent per gallon tax on gasoline and a 24.4 cent tax on diesel, both of which have not been raised in nearly three decades, even as fuel efficiency standards have improved.
That makes fuel cheap. German drivers paid $6.12 per gallon of fuel in 2019, versus $2.87 in the United States, according to the Peter G. Peterson Foundation. In Britain, taxes account for 63% of the fuel price at the pump, versus 19% in the United States.
Biden has vowed not to raise taxes on Americans making less than $400,000 a year, which includes the overwhelming majority of the country.
Influential trade groups, including the U.S. Chamber of Commerce, have failed to convince lawmakers to raise the fuel tax to pay for roads. 'We believe in a user-based system for roads, bridges and transit' said Ed Mortimer, its vice president of Transportation and Infrastructure.
Some Republicans, including Senate committee leaders John Barrasso, of Wyoming, and Chuck Grassley, of Iowa, introduced a bill that included a gas hike tied to inflation and a national electric vehicle fee last year.
Some sort of compromise on funding is necessary.
'If the White House and lawmakers can't find agreement on the Highway Trust Fund, then it doesn't bode well for the rest of the package,' said Quincy Krosby, chief markets strategist at Prudential Financial, who consults on transportation financing.
Biden is also expected to ignore calls from lawmakers for a new way to tax motorists based on how far they drive, not how much fuel they use, a third source familiar with the plan told Reuters.
Tax Hikes Americans Are Facing:
Tax hikes for American households making more than $400,000 a year. It is unclear how much, financial experts say it could hit married couples.
Biden could raise the corporate tax rate to 28 per cent, from 21 per cent. Trump signed legislation dropping the rate to its present level from 35 per cent
Another potential pay-for would get at the 'stepped up' basis for investments that go into estates
White House has floated the idea of more taxes on motorists, but has scaled back plans for a pay-per-mile scheme.https://www.dailymail.co.uk/news/article-9418613/Joe-Biden-prepares-announce-3-trillion-tax-hikes-fund-infrastructure-package.html