President Joe Biden’s 2022 budget proposal released today signals a commitment to transformational policy solutions that not only invest in people and communities but also ensure corporations and rich people contribute more in taxes to support the economy that makes their wealth and profits possible, the Institute on Taxation and Economic Policy (ITEP) said today.
As the economy continues to recover and the early days of the pandemic are further behind us, the nation’s policymakers cannot rest on their laurels. The truth is that the pre-pandemic economy, which was in its 11th year of recovery, worked best for the elite few. Stock market values and low unemployment masked the harsh truth: the rich were amassing more wealth while four in 10 people didn’t have $400 readily available to cover an unexpected expense. This was a direct result of four decades of policies that too often prioritized tax cuts for the wealthy. President Biden’s approach is fundamentally different.
“Raising taxes on the wealthiest and on profitable corporations increases fairness in our economy and provides revenue for investments that help everyone, from bridges and trains to health and childcare,” said Amy Hanauer, executive director of ITEP. “And funding the IRS will ensure that—just like working people who consistently pay what they owe—wealthy shareholders and corporations will also have to comply with the tax code.”
ITEP has analyzed some of the tax components of President Biden’s plan. All its analyses related to the American Jobs Plan and American Families Plan are here. More specifically:
- ITEP’s analysis of Biden’s proposals to increase the top marginal tax rate from 37 percent to 39.6 percent and increase the capital gains tax rate for millionaires finds that only 1 percent of taxpayers would pay more. National and state-by-state numbers are here.
- ITEP’s analysis focusing exclusively on the capital gains rate increase reveals an even smaller percentage of the population (0.4 percent) would pay more: National and state-by-state numbers are here.
- Biden has also proposed to increase the corporate tax rate from 21 percent to 28 percent, and the administration is exploring a global minimum tax. ITEP’s most recent research on the tax-paying habits of profitable corporations, cited often by the president and White House officials, is here.
- The president also proposes to extend the recently enacted expansion of the Child Tax Credit (CTC). The expansion makes the credit fully refundable (ending the rules that barred many low- and moderate-income families from receiving the full credit) and is expected to cut child poverty in half this year. Nearly all children would benefit, but families in the lowest-income 20 percent would have the biggest after-tax income boost. A distributional analysis of the CTC expansion is here.
- ITEP’s analysis of the president’s proposed EITC expansion finds that 20 million taxpayers would benefit.
“President Biden’s plan to improve the tax code is good economics, good politics, and good for our people and communities,” Hanauer said.