President Biden on Thursday called for raising taxes on the wealthy and corporations to boost a sagging economy afflicted by rising inflation and slow hiring, and he vowed to unleash the IRS upon the well-to-do.
Mr. Biden said the nation’s economy has reached “an inflection point” in which the wealthiest taxpayers and biggest corporations are skirting their responsibility to cover the cost of government safety net programs.
“Big corporations and the superwealthy have to pay their fair share of taxes,” Mr. Biden said at the White House. “It’s long overdue. I’m not out to punish anyone, I’m a capitalist. If you can make a million or a billion dollars, that’s great. All I’m asking is to pay your fair share.”
Mr. Biden said he is ordering the IRS to crack down on wealthy Americans who are exploiting tax loopholes or not paying taxes altogether. He repeated his campaign promise that Americans earning less than $400,000 won’t be affected by the proposed tax hikes and the crackdown.
The top 1% of Americans choose not to pay $160 billion in taxes per year, but the IRS doesn’t have the resources to pursue tax evaders, Mr. Biden said. Audit rates on those making $1 million a year or more fell by 80% between 2011 and 2018, a White House fact sheet said.
By not ponying up, the president said, the affluent and corporations have left middle-class families behind, unable to get ahead because of the rising cost of child care, prescription drugs and education.
Mr. Biden also wants to raise the top individual marginal tax rate, the capital gains rate and the corporate tax rate.
Republicans, however, charge that the tax increases would force businesses to increase prices, worsening inflation and forcing Americans to pay even more for consumer goods.
Rep. Kevin Brady of Texas, senior Republican on the House Ways and Means Committee, said Thursday that the $3.5 trillion spending plan is “easily the biggest economic blunder of our lifetime.” He said it would worsen inflation, make the U.S. less competitive and make more Americans dependent on government handouts.
“This is trillions of wasteful government spending that will fuel inflation even further,” Mr. Brady told reporters. “This will raise taxes on the middle class and small businesses.”
He termed “sheer nonsense” the president’s claim that the massive spending bill would reduce inflation.
“Spending another $3.5 trillion more in this economy, as he‘s proposing to do, will only drive prices up higher,” Mr. Brady said. “Paying Americans more not to work, and creating incentives in child care and health care that act as a barrier to reconnecting them to work, will drive prices not just up further, but make that ‘Biden-flation’ last longer. This is nonsense.”
The president’s speech comes one day after the House Ways and Means Committee voted to advance the tax portion of his proposed $3.5 trillion social safety-net bill.
“This is our moment to bring working people back into the economy. This is our moment to prove to the American people that their government works for them, not just for the big corporations and those at the very top,” he continued.
The proposed $3.5 trillion economic plan would dramatically expand the nation’s social safety net by expanding government programs. It includes funding for paid family leave, health care, education, and provisions to combat climate change.
Lawmakers also are debating a $1.2 billion bipartisan bill concentrating on roads, bridges, railroads and other traditional infrastructure concerns.
Senators are haggling over the cost of the $3.5 trillion plan and the tax increases that would pay for it.
Liberal senators insist the bill must include social program, climate change and immigration provisions, while centrist Democrats and Republicans are seeking a smaller price tag.
The bills would be funded in part by massive tax increases on the wealthy. Mr. Biden has proposed raising the top individual marginal tax income rate to 39.6% from 37% and significantly increasing the capital gains, to 25%, and corporate tax rates also.
The proposal also includes a 3% surcharge on individual income above $5 million.
Now the tax proposals will head to the House Budget Committee, which will consider them with other parts of the proposed bill that have been passed by different committees.
The president pointed to polls that show public opinion is in favor of tax increases. But other polls, including a Morning Consult-Politico survey, found mixed support for raising taxes.
Business groups such as the U.S. Chamber of Commerce and the Business Roundtable, have vowed to fight any tax increases.
Mr. Biden‘s call for higher taxes comes as consumers across the country are feeling pain at checkout lines as prices on everyday goods continue to rise.
Mr. Biden blamed “pandemic profiteering” for the price increases, saying gasoline prices should be going down, not up.
“His strategy of begging the Middle East to turn on the spigot to try and lower prices while he is the champion of driving up higher prices here in America, with [curtailing] American-made energy and American made pipelines — it’s simply hypocritical,” Mr. Brady said. “You can’t rely on OPEC and Russia for America’s fuel sources when you have all that you need right here at home.”
Inflation has become a rallying cry for Republican lawmakers, who have used it to hammer the Biden administration. That rhetoric escalated after the economy added far fewer jobs than expected in August.
Hiring slowed sharply in August, adding just 235,000 jobs, the Bureau of Labor Statistics said, vastly missing the 728,000-750,000 gain some economists had predicted. It is the fewest number of jobs added to the economy since January. The unemployment rate dropped to 5.2% from 5.4%.
Mr. Biden has blamed the surging COVID-19 delta variant for the disappointing jobs number.
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