President Joe Biden has announced that his March 9th budget proposal will include his plans to raise taxes in order to reduce the federal deficit. Biden confirms that this will not violate his promise not to raise rates on Americans making less than $400,000 a year. Although, if you do make more than this amount, here’s what you need to know about his proposal.
What does the tax increase entail?
Biden’s plan to increase taxes could affect many Americans and businesses, so it’s important to understand what exactly the president is proposing. These taxes would raise the top marginal tax rate from 37 percent to 39.6 percent. Additionally, he proposes to reinstate the limitation on itemized deductions for those making over $400,000 a year. Lastly, Biden’s plan would impose a new 12.4 percent payroll tax on wages above $400,000, which would be split between employees and employers. For businesses, the president proposes to increase the corporate tax rate from 21 percent to 28 percent. Although the specifics of Biden’s plan may change in Congress, staying up to date with them and knowing what to expect is very beneficial.
Why is Biden committing to this plan?
Biden is confident that this plan will help reduce the nation’s debt while still allowing for investments into necessary areas such as infrastructure, education, and healthcare. He has vowed to cut the federal deficit by $2 trillion over 10 years. In order to make this dream a reality, he proposed a number of measures that focus on reducing spending and increasing revenue. These include raising taxes on corporations and wealthy individuals, as well as reducing entitlements and military spending. Moreover, Biden has also pledged to invest in renewable energy and research for new technologies to create jobs and stimulate economic growth.
Where does Biden’s plan stand in Congress?
Years before Biden became President, Democrats have been proposing a new tax on rich people. Republicans and centrists like Senator Joe Manchin for example, have opposed the idea of increasing taxes and kept it from becoming a law. The tax increase plan has become increasingly difficult compared to the past, as the Republicans now have control of the House of Representatives. The Republicans have agreed not to raise the U.S. debt limit, as long as Biden is serious about the spending cuts. Although, part of his plan to cut the deficit includes increasing taxes, so it is unclear how it will be received by Republicans in Congress.
When will a final decision be made regarding the plan?
The future of President Biden’s proposed policies is uncertain, as the final decision on the matter has yet to be made. After the proposed legislation has been debated and discussed in Congress, both houses of the Legislative Branch will vote on the proposal. If the proposal passes both the House and Senate, it will then be sent to the President. Once he signs it, it will become law and all associated policies will be implemented. It remains to be seen when this process might come to an end, but all eyes are on Biden’s proposal as the nation awaits the results of his proposed legislation.
Conclusion
Increasing taxes on high-income earners would be a great way to reduce the deficit and help stimulate the economy, which is one of Biden’s primary motives. This is a proposal that many Democrats have been wanting for years and if it passed, it will be interesting to see what the exact tax will be and how it will affect certain taxpayers. Overall, it seems as though increasing the tax will lead the economy into a positive direction, which is definitely needed. For more updates regarding Biden’s upcoming budget proposal, please visit https://www.whitehouse.gov/omb/budget/.
