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President Joe Biden to propose taxing the rich to fund social and education programs

A Biden administration official said the tax proposal, which the president campaigned on, would be announced ahead of Wednesday’s congressional address

SHARE President Joe Biden to propose taxing the rich to fund social and education programs
There could be changes in the child tax credit payments.

Photo Illustration by Alex Cochran, Deseret News

President Joe Biden is preparing a tax proposal that would target the earnings of wealthy Americans to fund social and education programs, a commitment that Biden made during his White House campaign.

The president’s proposal — which is expected be released ahead of his April 28 address to Congress — would increase the tax rate of high-income Americans, while also increasing the top capital gains rate, Axios reported.

  • Biden’s plan is “an opening bid for Hill negotiations,” according to Axios.

Funding for social programs

Bloomberg also reported Biden’s proposal would be announced ahead of his congressional address and that it would be part of the tax increases the president wants “to fund social spending in the forthcoming American Families Plan.”

  • “The tax increases would help pay for Mr. Biden’s planned antipoverty and education proposal to be announced next week,” The Wall Street Journal reported.
  • “This proposal, which Biden campaigned on extensively, changes the tax rate for less than 1% of Americans (in fact, less than 1/2 of 1% of Americans),” White House chief of staff Ron Klain said on Twitter Friday.

White House press secretary Jen Psaki confirmed that the Biden administration is working on a tax proposal and that the administration is “still finalizing” what the money will go to.

  • “The president’s calculation is that there’s a need to modernize our infrastructure. There’s a need to invest in child care. There’s a need to invest in early childhood educations and making our kids and the workers of the next generation more competitive. And he should propose a way pay for it. His view is that can be on the backs of the wealthiest Americans who can afford it and corporations and business who can afford it,” Psaki told reporters.
  • The press secretary said Biden still upholds his commitment not to raise taxes for people who make less than $400,000 annually.

How would Biden’s new tax plan work?

Biden campaigned on a promise to increase the top capital gains tax rate to match the rates of other forms of income, The Wall Street Journal reported. The proposal would nearly double the capital gains rate and make it equal to the federal tax rate of the wealthy.

Capital gains taxes are “a tax on the growth in value of investments incurred when individuals and corporations sell those investments,” according to Investopedia.

  • For taxpayers who make $1 million or more annually, “the new top rate, coupled with an existing surtax on investment income, means that federal tax rates for wealthy investors could be as high as 43.4%,” according to Bloomberg.
  • Currently, capital gains can potentially be taxed at top rate of 23.8%, which includes a 3.8% payroll or investment taxes, reported The Wall Street Journal. Biden’s proposal would raise that total rate up to 43.4%, according to the Journal.
  • “A 3.8% tax on investment income that funds Obamacare would be kept in place,” Bloomberg reported.