Photo Credit: REUTERS/Elizabeth Frantz
Joe Biden, the President of United States has proposed a new tax plan that would affect some of America’s wealthiest people and corporations. The move is considered an anti-inequality campaign and was met with much support from lawmakers from several parties.
The prospects of increasing taxes have been revived in the wake of a stunning political turnaround. A Democrat from West Virginia, Senator Joe Manchin has thrown his support behind Senator Chuck Schumer’s proposition which would see rates go up for those earning higher than the average. Biden was optimistic of the decision after loosing this issue years ago when he pushed for the same to happen – but was rejected by Congress.
The contribution of companies to tax revenue has been low since the 1940s.
If this bill becomes law, corporations with at least $1 billion in profits will be taxed 15%. The United States Treasury has estimated that within just 10 years of its implementation, over $313 billion would be collected from corporations.
In President Joe Biden’s opinion, companies should pay a “fair share.”
It turns out that some companies are actually avoiding paying taxes. Research groups in the Institute on Taxation and Economic Policy have found this to be true, with many large corporations not paying federal income tax at all. Further, former President Trump successfully lobbied for a reduction of the corporate tax rate from 35% all the way down to 21%.
When Biden took over, he set out to increase the rate. Just last year, he proposed the rate be increased to 28% but it was junked by Congress.
According to Senate Majority Leader Chuck Schumer, who also happens to be one of the proponents of the bill, apart from the discussion on increasing tax rates, Congress should also discuss “lower prescription drug prices, tackle the climate crisis with urgency and vigor, ensure the wealthiest corporations and individuals pay their fair share in taxes, and reduce the deficit.”
“Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination,” Senator Manchin, the other main proponent of the bill, said to the public.
The Senator has confirmed that this bill will indeed raise taxes on the wealthy, but the bill, called the Inflation Reduction Act of 2022, is not identical to that of the bill previously proposed by Democrats.
A Biden win with the legislation
The Manchin-Schumer bill is a watered-down version of last year’s multi trillion-dollar tax plan. It will be difficult for Biden to gain momentum regarding this issue but at least it provides a start in the direction that Biden wants to lead.
“This is the action the American people have been waiting for,” Biden stated, adding a call to lawmakers to approve the bill. “This addresses the problems of today — high health care costs and overall inflation — as well as investments in our energy security for the future.”
The prospect of an initiative by Manchin and Schumer gaining support in the Senate has set up a positive outlook for Biden’s agenda ahead to the November 8 election. The voting could also provide a peek at the possibility of Democrats maintaining power within the chambers.
Biden said, “This bill will reduce the deficit beyond the record-setting $1.7 trillion in deficit reduction we have already achieved this year, which will help fight inflation as well.”
“And we will pay for all of this by requiring big corporations to pay their fair share of taxes, with no tax increases at all for families making under $400,000 a year,” the president added.
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