Biden blows up billionaires and tax dodgers to claim Democrats’ $ 3.5 trillion budget


Top line

President Joe Biden on Thursday denounced the growing inequality of wealth in the United States in a bid to bolster support for the Democrats’ noble political agenda, which is quickly taking shape in Congress as the House advances on sweeping proposals to expand the country’s social safety net while raising taxes for the ultra-rich.

Highlights

In a speech to the White House, Biden highlighted the staggering growth in wealth of the richest Americans during the pandemic and repeatedly stated that billionaires and corporations should “pay their fair share” in taxes, adding that “Ordinary, hard-working Americans” have essentially “been cut off from the business. “

Biden opened his comments by thanking the House committee that voted Wednesday to push forward a set of sweeping tax proposals included in the Democrats’ $ 3.5 trillion budget package, paving the way for a floor vote in the next weeks.

He also detailed a new proposal that would require banks to report annual inflows and outflows of bank accounts with at least $ 600 in transactions, giving the Internal Revenue Service an opportunity to crack down on potential tax evasion.

In their plan, Democrats proposed a series of measures targeting high-income Americans, including increasing the top tax rate to 39.6% from 37% for Americans earning more than $ 400,000 a year and by investing $ 80 billion in the IRS to help strengthen its taxes. application and technology.

Democrats have also proposed increasing the capital gains tax rate from 20% to 25% and the corporate tax rate from 21% to 26.5%, targeting two “opaque” sources of income. According to the Treasury, which high incomes commonly use to avoid tax.

Crucial quote

“The data is absolutely clear: Over the past 40 years, the rich have gotten richer, and too many companies have lost their sense of responsibility to their workers, their communities and the country,” Biden said Thursday, stressing at minus 55 of them. the country’s largest corporations paid nothing in federal taxes last year. “If you can make a million or a billion dollars, that’s great, but all I’m asking is that you pay your fair share, and you don’t.”

Surprising fact

According to a Treasury Department report last week, the richest 1% of taxpayers, ranked by income, did not pay about $ 163 billion in taxes last year, which is about 28% of the growing tax gap in the country. In the report, the Treasury said the wealthiest Americans are responsible for most of the tax evasion because high-income taxpayers have the financial resources to “hire the services of accountants and tax preparers. which help them not to bear their real income tax “.

Large number

700 billion dollars. This is how much the Treasury Department estimates that Biden’s plan to narrow the tax gap by stepping up enforcement will increase over the next 10 years. About $ 460 billion is expected to come from the information disclosure component, but not everyone is convinced of the revenue potential. The Congressional Budget Office said last week that the Biden administration’s enforcement plans would only bring in about $ 200 billion in additional revenue. The agency expects some taxpayers to adapt to the new measures and find new ways to evade detection, reducing expected returns after a few years.

Key context

The White House tax agenda hit a critical juncture last week as House Democrats began drafting specific provisions for a massive budget reconciliation package filled with party priorities that didn’t make it into a package separate bipartite infrastructure. Although the price of the infrastructure plan has been slashed to satisfy GOP lawmakers, the budget resolution bill would use the Senate’s special reconciliation process to allow Democrats to bypass Republican support and pass the bill. expenditure law with only 51 votes instead of the usual 60. It would still require the support of the Senate 50 Democrats, but moderate senses Joe Manchin (DW.Va.) and Kyrsten Sinema (D-Arizona) have both voiced their opposition to the proposed cost of the budget bill. Citing concerns about rising inflation, Manchin said he would support up to $ 2 trillion in new spending, but only if Democrats can offset the price with cost savings and tax revenue.

Further reading

Income, inheritance, capital gains tax hikes and crackdown on retirement accounts: the house finally details how it will fund a $ 3.5 trillion social policy plan (Forbes)

Here’s why Democrats’ $ 3.5 trillion budget plan could impact every American (Forbes)

Democrats propose 2% tax on share buybacks to offset their $ 3.5 trillion budget plan (Forbes)

Richest 5% of Americans “Choose Not to Pay” $ 307 billion in Taxes Every Year, Says Treasury Report (Forbes)

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