KEY POINTS

  • Biden has promised not to raise taxes on individuals earning less than $400,000 a year
  • The President plans to raise the corporate tax rate to 28%
  • Several GOP lawmakers oppose Biden’s proposal to hike taxes on the wealthiest Americans

President Joe Biden recently completed 100 days in office and addressed a joint session of Congress where he proposed $4 trillion of ambitious investments in the economy and social safety net programs "necessary to compete on the global stage." He said he would demand big firms and the wealthiest Americans to "pay their fair share" to fund his proposed programs.

Biden said that the COVID-19 pandemic brought inequality in the U.S. to the forefront as millions of people lost their jobs and struggled to make both ends meet, while CEOs' salaries continued to increase and billionaires' net worths rose. The President proposed trillions in new taxes – hikes that would target the richest in the country but leave out the educated upper-middle-class suburban voters who stood behind Democrats and helped them achieve recent wins.

The President’s tax hike won’t affect upper-middle-class and elite professionals who earn their income through salaries, NBC News reported. In his joint Congress session speech, Biden said that his administration is “going to reward work, not just wealth.” He promised not to increase taxes on people making less than $400,000 a year, marking an increase from that of former President Barack Obama, who had set a $250,000 threshold for hiking taxes.

President Joe Biden told Congress that after Covid, the US must turn to rebuilding the middle class President Joe Biden told Congress that after Covid, the US must turn to rebuilding the middle class Photo: POOL / Melina Mara

However, the White House has sometimes caused confusion over whether his promise to not raise tax for those earning less than $400,000 a year applies to individuals or married couples, Politico reported.

According to NBC News, the President's proposal to increase the top marginal income tax rate to 39.6% is modest compared to other proposals. A White House official said that Biden’s proposed income tax rate would hit income above around $452,700 a year for individuals.

Biden’s proposals include increasing the corporate tax rate to 28%, requiring heirs to multimillion-dollar fortunes to pay taxes on inherited stocks, and changing how corporate earnings are taxed at home and abroad to hike revenue. He also wants to double the capital gains tax, but only for high earners.

Brian Riedl, a former aide to Sen. Rob Portman, R-Ohio, and now a senior fellow at the Manhattan Institute, said the President is “really protecting the coastal professional class that helped elect him.”

Several Republican lawmakers, however, have opposed Biden’s proposal to hike taxes on the wealthiest Americans. They claim that the Democrats are not revealing the true costs of higher taxes. Now, with an equally divided Senate and a slim majority in the House, the President has an uphill battle in Congress to obtain funds for his massive economic proposals.