In his bid to revive America’s economy and narrow the wealth gap, President Joe Biden has called for a 25% tax on billionaires, higher taxes on wealthy investors, and more significant corporate taxes. The move is part of his attempt to level the playing field by providing significant support to low- and middle-income Americans.
The proposal suggests that these tax measures are necessary as the wealth gap continues to widen. The ultra-wealthy have become more affluent during the pandemic, while many Americans have lost their jobs and livelihoods. The idea is to start a paradigm shift and create a more egalitarian society since income inequality has crippled the country’s economic development potential.
The tax increase would impact those with income above $1 million per year, making it an aggressive move to address America’s inequality. A recent study showed that approximately eight out of ten Americans support raising taxes on individuals earning more than $1 million per year. The general feeling amongst Americans is that the top earners can afford to contribute more, especially when there is so much economic hardship in the country.
The Biden administration has stated that the proposed tax hike on the ultra-wealthy would raise $2.5 trillion over ten years. This amount would be significant in funding the President’s ambitious plans to create jobs, improve infrastructure, and tackle climate change.
Under the proposed tax plan, the wealthiest Americans would have to pay taxes on capital gains, which are not always taxed depending on the circumstances. This move would primarily target wealthy investors, who have long enjoyed a lower tax rate on their gains, especially on investments that have matured for more than a year.
The aim is to adjust the tax code and ensure that wealthy investors and corporates enjoy no tax loopholes that offer them unfair advantages over the average American. The proposal would mean that the top 1% would pay as much in taxes on their investments as they would on their earned wages, pushing them to contribute more towards financing government projects and social programs.
The proposed corporate tax hike aims to rein in industries that enjoy special interests, lobby efforts, and tax incentives at the expense of American workers. The move would mean taxing large corporations at 28%, reversing former President Donald Trump’s 2017 cut from 35% to 21%.
The Biden administration believes that the new tax rate change would provide an additional $1.5 trillion over ten years. The proposal is crucial since it would provide more money for emergency response services, education, and other projects that benefit Americans.
The President has also proposed that companies pay higher taxes on profits earned overseas, limiting their tax incentives to relocate their operations abroad. Biden feels that these measures will keep American industries anchored in the country since it has long been considered cheaper to do business abroad.
The proposed increase in taxes would contribute significantly to curbing income inequality and creating a fairer society. However, the change is not going to be welcomed by some of the wealthiest Americans, who believe that it is unfair and will hamper their ability to create jobs. They argue that taxing them more would reduce their incentive to invest or innovate, which would ultimately hurt the economy.
Some experts also argue that raising taxes on the wealthy might not provide as much economic growth as expected. Other countries that have imposed similar tax hikes on the wealthy have seen the top earners relocate to other countries, taking their investments and capital gains with them.
Despite these concerns, the Biden administration is convinced that the proposed tax increase will be a significant step in narrowing the wealth gap and creating more opportunities for low- and middle-income Americans. The funds generated from the tax hike will provide the government with more resources to invest in infrastructure, education, and other critical social programs.
On the other hand, the proposal faces strong opposition from Republicans who feel that the increase in taxes would harm the economy and discourage investors. It remains to be seen how far the President can push the proposal, but he is determined to continue working towards creating a fairer society for all Americans. Meanwhile, the Biden administration continues to engage Congress in a bid to get the tax package passed into law. Only time will tell whether it earns their support or rejection.