US President Joe Biden said that his next priority -after the approval of the economic bailout that included a check for up to $1,400 for the vulnerable due to the economic crisis generated by the pandemic- will be a tax reform for the “rich” to pay more taxes.
Throughout his election campaign in 2020, the Democrat promised that the amount of money he considered a person to be too rich and had to pay more tax than he currently pays was $ 400,000. That is, anyone who earns more than $ 400,000 a year must pay a higher percentage of taxes.
However, in a recent interview Biden seemed to modify his criteria and the application of that money cap changed substantially: the 400 thousand dollars does not apply to a particular person but to the income of all the people who live in the same home.
In this way, if a couple of US citizens, who live in their home, and earn this figure together, they will see their tax payments increased. For example, if one of them earns 150,000 and another 250,000 a year, together they reach the top of 400,000 and become “rich,” according to Biden.
Biden’s tax plan will focus on ensuring that corporations and wealthy individuals pay their fair share.
New taxes on the rich could help pay for infrastructure and other priorities, said Shai Akabas, director of economic policy at the Center for Bipartisan Policy. But it remains to be seen if Biden can deliver on that campaign promise, since to make it law he must have the approval of Congress.
In preliminary versions of its plan, an increase of almost 3% in the tax payment is foreseen. Currently, payrolls of more than 400 thousand dollars a year pay 37% of that figure as tax. Biden aims to raise that percentage to 39.6%.
But you also want to limit the expense deductions that a person can make, these deductions will only be 28% of all income.
Many of Biden’s tax changes are designed to reverse some of the changes included in the Tax Cuts and Jobs Act passed under President Donald Trump in 2017.
For businesses, Biden proposes increasing the corporate tax rate from 21% to 28%. In 2017, the corporate tax rate fell from 35% to 21% under the Trump administration, a sharp drop from 40% that helped drive an increase in the national deficit and led to record share buybacks in US corporations.