The polls may be tightening as the 2020 presidential election is just over a week away, but Democratic candidate Joe Biden and his top advisers are already setting an aggressive economic agenda that would make tax hikes theirs. top priority if the former vice president was elected, FOX Business has learned.
Biden continues to tell Wall Street supporters that his comprehensive plan to raise taxes on wealthy individuals and businesses will likely be presented in the form of legislation almost immediately after taking office despite the pandemic-induced economic downturn in the country people familiar with Biden’s campaign strategy told FOX Business.
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Biden’s advisers are counting on a blue wave to bring him into the White House – with a Democratic Senate that will help them push through their tax hikes quickly and without compromise.
Much of the urgency stems from the need to generate revenue to pass Biden’s signature legislation – the $ 2 trillion infrastructure package that focuses on clean energy and would be implemented during the Biden’s first term, these people say. This spending program is the sine qua non of his electoral promise to revive the economy currently hampered by the coronavirus pandemic and to address certain climate concerns of Democratic voters.
People close to Biden say his urgency to pass tax increases is guided by other forces as well. As FOX Business previously reported, Biden believes raising taxes is a “moral issue” and the best way to start minimizing wealth inequality in America which he says has been exacerbated by lower taxes. taxes by the Trump administration.
And from a practical point of view: Biden is set to face a debt ceiling debate in July, which means he’ll have to sketch out a workable budget with a way to pay off his proposals soon after entering into office. function in January, if elected.
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Some economists, however, believe the decision to raise taxes during a recession is risky. After taking office following the 2008 financial crisis, former President Barack Obama and then-Vice President Biden postponed tax increases until the economy began to recover , fearing a prolonged recession if businesses and entrepreneurs grapple with high costs and wealthy people cut back on spending. their consumer spending.
Wall Street executives close to Biden say he has no qualms about raising taxes this time around, as he has been encouraged by some reports, including from Goldman Sachs, that his plans for infrastructure and other spending elements will offset the negative economic impact of the tax hike.
These leaders also say Biden also plans to implement all tax changes retroactively, and he will use a legislative tool known as “budget reconciliation” to speed up the process, so he only needs 51 votes in the Senate. .
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Of course, it all depends on the election. Following the strong performance of last week’s debate, incumbent Republican Donald Trump improved his position in the battlefield state polls, reducing the points of Biden’s lead. Then there is the ultimate makeup of the Senate; There are signs that vulnerable GOP seats may remain Republicans as the polls tighten in the final days leading up to the election.
But if Democrats run the table in winning the presidency, retaining the House and seizing power in the Senate, tax increases are underway and swift, say Wall Street leaders close to Biden.
According to a note obtained by FOX Business from an investment firm linked to the Biden campaign, corporate tax increases would drop from 21% to 28% (they would be lower than the Obama-era rate of 35% ). Other aspects of Biden’s corporate tax plan include:
- Tax foreign profits of US companies at a rate of 21% compared to 10% under Trump.
- Accounting income (the amount of money companies report in public financial statements, often different from the amount they deposited in their taxes) will be taxed at 15%.
- The elimination of a tax benefit for private equity firms – known as the deferred interest deduction – by increasing long-term capital gains for millionaires.
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On the personal income side, Biden has pledged not to raise taxes for people earning less than $ 400,000, although his plan does not recognize that small businesses file as individuals and would be hit. higher tax rates (the top bracket rising to 39.6% from 37%) and other levies as they struggle to survive an economy still hampered by the coronavirus pandemic. The Biden plan also ignores the fact that companies pass the costs of higher taxes on to consumers through higher prices and workers through lower wages.
Other aspects of Biden’s tax plan that impact individuals include:
- Increase capital gains and dividends; Under Biden, individuals will pay the same tax rate on capital gains – the money they make from their investments – as they pay on their wages (taking into account deposit status and amount of income). Usually, the capital gains tax rate is lower than the rate a person can pay on their wages.
- Inheritance tax would drop from 40% to 45%.
- The taxable income threshold for estates would also be lowered to approximately $ 5 million from $ 11.5 million.
A spokesperson for Biden did not respond to a request for comment.