To help pay for his latest $2 trillion spending package, President Joe Biden on Wednesday proposed the first major tax increase since 1993.
That’s when President Bill Clinton signed omnibus legislation that raised the gasoline tax and increased the top marginal income tax rate by one-third. The ensuing backlash cost Democrats control of Congress and swept in the first Republican majority in the House in 40 years.
Biden, whose economic team grew to fear too much additional deficit spending would prove destabilizing by spiking interest rates and boosting federal debt payments, is hoping the tax increases will be seen as skewed enough against the wealthy and corporations to avoid any broad-based resistance.
“The president has a plan to fix our infrastructure and a plan to pay for it,” White House press secretary Jen Psaki told reporters on Monday.
The first salvo in Biden’s “Build It Back Better” program is being billed as an infrastructure program, although traditional projects such as roads and bridges make up less than half of the new spending. A more comprehensive package of liberal domestic policies is slated to follow.
Republicans were eager to shift their focus to the tax side of the tax-and-spend equation. “And how will Biden pay for his plans that cost much but accomplish little? Tax hikes,” the party’s national committee charged in a statement. “Joe Biden is already reneging on his tax campaign pledge and is proposing tax increases that directly threaten the middle class.” …
… The White House is adamant that the direct tax increases will be confined to households earning at least $400,000 a year. The corporate tax rate would be increased from 21% to 28%, partially negating a cut signed into law by former President Donald Trump in 2017. Biden would also like to restore the Clinton-era top personal tax rate of 39.6%.