President Biden proposed a series of new taxes Thursday on corporations and the wealthy, arguing it was time to end the era of “trickle-down economics.”
After months of negotiations and delay, Mr. Biden announced the tax increases as part of his long-stalled $1.75 trillion social welfare and climate change bill. Together, the deal poses a “truly consequential” reordering of society, the president said.
“We need to build America from the bottom up and the middle out, not from the top down with the trickle-down economics that’s always failed us,” Mr. Biden said. “All I’m asking is, pay your fair share.”
The proposal amounts to one of the most extensive tax hikes in recent history. The tax increases are slated to affect corporations and wealthy individuals.
Overall, the White House estimates the changes would generate more than $1.9 trillion in federal revenue over the next decade.
One of the biggest new revenue streams would be a 15% tax on corporate profits. It is estimated to raise $325 billion over 10 years, although that figure has yet to be independently verified.
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The 15% flat rate would apply to companies that publicly report more than $1 billion in profits over three years. It would hit the profits of more than 200 U.S. companies.
Senate Finance Committee Chairman Ron Wyden, Oregon Democrat, said the proposal aims to ensure that large corporations, such as FedEx and Nike, pay their fair share in taxes.
“The most profitable corporations in the country are often the worst offenders when it comes to paying their fair share,” Mr. Wyden said. “Year after year, they report record profits to shareholders and pay little to no taxes.”
The minimum tax on profits is coupled with a 15% tax on foreign earnings for corporations. Experts say the foreign earnings penalty is meant to prevent companies from shipping U.S. jobs overseas. Administration officials estimate it would raise $350 billion.
Similarly, Mr. Biden plans to impose a 1% surcharge on corporations that buy back their stocks rather than invest directly in their businesses. The surcharge, White House officials estimate, would raise $125 billion over the next decade.
Apart from corporate tax hikes, the White House is proposing a menu of taxes on the rich.
“I can’t think of a single time when the middle class has done well but the wealthy haven’t done very well,” Mr. Biden said. “I can think of many times, including now, when the wealthy and the superwealthy do very well and the middle class doesn’t do well.”
To try to change that, Mr. Biden is backing a 5% “wealth tax” on individuals with an adjusted gross income above $10 million.
The figure jumps to 8% on adjusted gross incomes over $25 million. It is estimated to raise $230 billion over the next decade.