President Biden has recently proposed the idea of raising taxes on the wealthiest American taxpayers and corporations. His proposals aim to attack the budget deficit by changing tax codes and policies which allow the rich to lower their tax liability.
These revisions to tax codes would counteract many of the changes that occurred in the Tax Cut and Jobs Act of 2017, passed under the Trump Administration. However, Republicans have not seemed to be on board with the idea of increasing taxes on the wealthiest individuals and corporations.
While most people would assume that the reversal of codes passed in the TCJA would affect their economic burden, the average American taxpayer would not be affected at all. Biden's budget has called for a new tax on households worth more than $100 million, which requires a tax of 20 percent on their income and unrealized capital gains. Again, the tax reforms, known as the "Billionaire Minimum Income Tax", would only apply to the top one-hundredth of one percent who are worth over $1 Billion. It is estimated that the new tax would raise nearly $360 Billion over a decade.
I think tax revisions are necessary, but it will be interesting to see how Republicans respond to Biden's proposals. The main argument that I see arising is that it would deter investment, but I think it could be beneficial to have tax revisions to help reduce the current deficit.
Source: https://www.nytimes.com/2022/03/28/us/politics/biden-billionaire-tax.html
I think it is interesting that Biden's new tax plan will not affect the average American at all, and instead only affect the wealthiest few Americans in the country. As you also state, I do think tax revisions are necessary, and the extra income from this tax increase on the richest in America would be beneficial for this country, but I don't think Congress will be able to pass a bill like this quickly, seeing as there will be lots of opposition from Republicans who do not want any tax increases.
ReplyDeleteI agree that tax revisions are definitely necessary and would be helpful to reduce the current deficit. With the division between democrats and republicans it would first make it very difficult to pass. Additionally, if Biden or the democrats do not stay in office after his term and the bill is passed it is also very likely the Republicans would counter this change. This would make it very difficult to reach that number of $360 billion in the next decade.
ReplyDeleteI agree that the division between the two parties could be the main issue in passing this, I think we also see some retaliation from wealthy democrats as well.
DeleteI don't think Republicans would ever allow these revisions to pass, we have seen how stubborn both sides could be and given how much money politicians make it seems almost impossible.
ReplyDeleteI feel that in theory this makes sense, but the wealthy usually want to stay wealthy. Since there are many wealthy people in power that tend to make or influence these decisions, they'll be opposed and it will not be passed.
ReplyDeleteI do believe that this 'billionaire tax' will prove to be useful for the United States, considering the massive fiscal debt that the nation seems to accrue. As proven during the Reagan administration, the concept of 'trickle-down economics, which is in favor of decreasing taxation at the higher end of the income distribution, doesn't work in the modern world, due to the existence of international markets with higher growth rates than domestic American markets, causing a large portion of funds that would've otherwise been invested domestically to be spent abroad, culminating in a net negative for the domestic economy. I do believe that a higher tax rate would allow the government to gather greater amounts of tax revenue, which could then be utilized to foster supply side policies for investment and development in the economy. However, as many politicians seem to have a vested interest in the wealth of billionaires, I am not too hopeful about the possibility of this bill being passed.
ReplyDeleteThis will be interesting to see in the long run. Investment decline would be very possible, as well as consumption following it. But, if it is estimated that the new tax would raise nearly $360 Billion over a decade, government spending would certainly benefit. The tax on unrealized capital gains also stuck out to me, that could be quite the hefty penny.
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