Preparing to raise taxes to raise money, Biden targets the wallets of the rich

Install the Sina Finance client to receive the most complete market information the first time →[enlace de descarga]

Original title: Preparing to raise taxes to raise money, Biden targets the wallets of the rich

Source: Beijing Commercial Daily

After “offloading” $ 1.9 trillion, US President Biden got the idea for taxes. The taxes that Trump cuts may have to be added back. On the 15th local time, the White House confirmed that Biden is planning a major increase in federal taxes for the first time in nearly 30 years, with the goal of funding the next economic stimulus plan.

This tax increase is actually a promise Biden made during last year’s election campaign. At the time, Biden declared that he would abolish former President Trump’s tax cuts on the “first day” of the new administration. Under parts of Trump’s 2017 tax law, the current tax law primarily benefits businesses and the wealthy.

The consideration of tax increases is related to the next round of the economic stimulus plan. Although the current horoscope has yet to be written, there have been many reports in the media that the Democratic Party intends to establish US $ 1.5 trillion as the end result of the new round of economic stimulus, and some Investment banks also predict that the scale of the plan will definitely be in excess of US $ 1.9 trillion.Goldman sachsThe projected figures are even bolder: $ 2 trillion is far from enough, and the final scale may be as high as $ 4 trillion.

Goldman Sachs predicts in the latest research report that the next round of the stimulus plan is primarily for infrastructure facilities, which will increase at least US $ 2 trillion in spending on traditional and green infrastructure and tax incentives. If the Biden administration expands the program to other policies, such as expanding child care benefits and extending child tax credits, the total amount may rise to about $ 4 trillion.

Such a large print is no small test for timid America, after all, it has just experienced a major US $ 1.9 trillion “water release” and has already gone into debt. Therefore, Biden is looking at the wallets of the rich. According to people familiar with the matter, Biden plans to substantially increase federal taxes for the first time since 1993 in order to obtain the necessary funds for the aforementioned plan.

In an interview with a reporter for the Beijing Business Daily, Yang Shuiqing, an assistant researcher at the Institute of American Studies of the Chinese Academy of Social Sciences, candidly said that since the Biden administration, the tax increase plan is feasible because it increases revenue. prosecutors. to support expenses.

Four people familiar with the matter said the White House hopes to propose a series of tax increases that echo Biden’s proposals during the campaign. Several measures currently planned or under consideration include: increasing the corporate tax from 21% to 28%; reduce limited liability tax incentives for businesses, partnerships and other businesses; increase the personal income tax rate for people with annual income of more than US $ 400,000; expand the scope of the inheritance tax; and impose a higher capital gains tax on people with an annual income of at least $ 1 million.

In addition to tax increases to support the next round of economic stimulus, taxes for the rich may also be linked to another internal contradiction: the polarization between rich and poor.

Since the outbreak of the new corona epidemic, including theAmazonHead of the company Jeff Bezos,TeslaAutomobile President Elon Musk andMicrosoftThe assets of the 10 richest people in the world, including founder Bill Gates, and other wealthy Americans, have soared to a total of $ 540 billion. On the contrary, millions of people at the bottom lose their sources of income and can only live on the help of the government.

Against this backdrop, calls for property taxes on the wealthy have long been heard. Although the Biden administration has previously rejected the “direct wealth tax” proposal put forward by Democratic Senator Warren, from today’s point of view, it is highly likely that the wealthy group is the main focus of Biden’s tax collection. .

At a press conference on the 15th, White House spokesperson Jen Psaki stated that the White House hopes to fulfill the president’s campaign promise by increasing taxes on the wealthy and on businesses. Biden believes that those rich people have not lived up to their responsibilities and companies also have to pay more taxes.

Bloomberg noted that for the Biden administration, not only can tax reform provide funding for key measures like building infrastructure, responding to climate change, and expanding financing for the poor in the United States, but it can also help to resolve inequality in the tax system. that worries the Democratic Party.

However, there are also many concerns in the United States regarding the tax increase. According to a recent analysis by the US Taxation Foundation, raising the federal corporate tax rate to 28% will increase the federal state comprehensive tax rate to 32.34%. This will make the United States the highest tax rate country in the OECD and Group of Seven (G7) countries, and will also increase the cost of investment in the United States. The foundation said: “We estimate that this will reduce the long-term economic output of the United States by 0.8%, reduce 159,000 jobs and reduce wages by 0.7%.”

Yang Shuiqing also analyzed that Biden’s resistance to taxing the rich remains relatively strong. For the wealthy, the payroll tax is a very small part and the focus is on the capital gains tax, because most of the money comes from capital. If it doubles according to Biden’s plan, it will increase the cost of the investment and have a greater impact on the financial market. In addition, the approval of the bill requires a vote and the process of the members. In the past, tax cuts were happy for everyone, but it may not be so easy to add it back now.

In terms of corporate taxes, Yang Shuiqing noted that Trump lowered the tax rate from 35% to 21% at the time, greatly boosting earnings and US stock prices. If Biden raises the 28% statutory tax rate again, will have the biggest impact on industries that are already highly valued, such as communications services, healthcare, and consumer goods. According to estimates, the top five tech giants (Microsoft, Amazon,Apple、GooglewithFacebook) The valuation will be reduced by more than 10%.

Beijing Business Daily Reporter Tao Feng, Intern Reporter Zhao Tianshu

Editor in Charge: Zhang Yujie SF107