Biden’s tax hike proposal to face tough battle in Congress
U.S. President Joe Biden’s 4-trillion-U.S.-dollar spending plans may be a tough sell in Congress, as tax hikes proposed to offset the cost have prompted backlash from Republican lawmakers, and even raised eyebrows among moderate Democrats.
Biden unveiled a 1.8-trillion-dollar spending proposal for childcare and education on Wednesday night, when addressing a joint session of Congress, just weeks after putting forward a 2.3-trillion-dollar infrastructure plan.
Urging corporate America and the wealthiest 1 percent of Americans to “pay their fair share,” Biden said his tax policies, which include raising the corporate rate (from 21 percent to 28 percent), the top personal income tax rate (from 37 percent to 39.6 percent) and the capital gains rate (from 20 percent to 39.6 percent for households earning 1 million dollars or more), will help pay for what he proposed to spend in 15 years.
Calling the 2017 tax cut “a huge windfall” for corporate America and those at the very top, Biden said it had poured billions of dollars into the pockets of CEOs, widening the pay gap between CEOs and their workers.
“Wall Street didn’t build this country. The middle class built this country,” said the U.S. president, arguing that it’s time to grow the economy from the bottom up and middle-out.
Delivering the Republican Party’s rebuttal to Biden’s address to a joint session of Congress last week, Senator Tim Scott of South Carolina said the president’s tax hike proposals, if enacted, would lower wages, kill jobs and shrink the U.S. economy.
Senate Minority Leader Mitch McConnell, meanwhile, said in a tweet that Biden delivered a multi-trillion-dollar shopping list that “was not even intended to earn bipartisan buy-in,” calling it a “lengthy liberal daydream.” The Republican leader had previously said that he thinks no Republican would vote in favor of raising taxes to pay for the infrastructure plan.
Within his own party, Biden’s sweeping spending plans could also face resistance from moderate Democrats, who have already raised concerns over proposed tax hikes.
Josh Gottheimer, a House representative from New Jersey, recently told U.S. news website Axios that “we need to be careful not to do anything that’s too big or too much in the middle of a pandemic and an economic crisis.”
Scott Peters, a representative of California, and Joe Manchin, senator of West Virginia, both indicated that they consider a corporate tax rate of 28 percent to be too high, and would be inclined to support a smaller tax hike. The 2017 tax law slashed the top corporate tax rate from 35 percent to 21 percent.
With slim majorities in both chambers of Congress, Democratic leaders are poised to face challenges in unifying the party. In the 50-50 split Senate, the party can’t afford to lose a single vote, while in the House of Representatives, the party can lose just three Democratic votes, with unanimous Republican opposition.
Greg Cusack, a former member of the Iowa House of Representatives, told Xinhua that Biden is potentially “the most significant president” since Franklin D. Roosevelt if Congress can pass his legislation. “That’s a big ‘IF,'” he said. “However, the ball is now in Congress’ court and this doesn’t look promising.”
Outside the Capitol Hill, intense discussions over the proposed tax hikes are underway.
Neil L. Bradley, executive vice president of the U.S. Chamber of Commerce, praised the idea of funding infrastructure largely through user-based fees, rather than tax hikes, welcoming a bipartisan proposal recently released by the House Problem Solvers Caucus.
“While proposing ways to pay for new spending and for expanded refundable tax credits is laudable, the Biden administration has chosen to pursue inefficient tax increases that would undermine economic growth and reduce U.S. competitiveness,” said Erica York, an economist with the right-leaning Tax Foundation.
Amid doubts and concerns, U.S. Treasury Secretary Janet Yellen on Sunday defended Biden’s proposals on CNN, giving a “resounding yes” to the question of whether “trading higher taxes on high-income taxpayers for middle-class tax cuts and major economic investments pro-growth.”
Despite pro-growth arguments, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a U.S. watchdog group, urged Congress to shrink the size of the packages or identify additional offsets, or some combination, arguing that Congress should match new spending and offsets over the customary 10-year timeframe, rather than the 15-year window Biden proposed.
“Usually people with big dreams are successful, but, I guess on the flip side of that, I have concerns of who’s going to pay for all those big dreams,” Tom Waters, a soybean and corn farmer in Orrick, in the Midwest state of Missouri, told Xinhua.