White House officials on Monday defended Joe Biden’s tax hike on the wealthy to pay for his $1.8 trillion ‘human infrastructure’ plan but couldn’t address some specifics what the president has planned.
Biden will announce this week his proposal to nearly double taxes on capital gains to 39.6% for people earning more than $1 million. It would be the highest tax rate on investment gains since the 1920s.
‘This change will only apply to three tenths of a percent of taxpayers, which is not the top 1 percent, it’s not even the top one half of 1 percent. We’re talking about three tenths of a percent, that’s about 500,000 households in the country,’ he said at the daily White House press briefing. ‘So, for the other 997 out of 1000 households in the country, or the other 150 million households in the country, this is not a change that will be relevant.’
The hikes would have top earners paying up to 43.4 per cent, when an existing investment surtax is included. For those earning more than $1 million a year in high-tax states like New York and California, their total rate could be above 50 per cent.
California, New York, Minnesota, and Oregon would have the highest top capital gains rates of 56.7 percent, 54.3 percent, 53.3 percent, and 53.3 percent, respectively, according to analysis from the Tax Foundation.
Roughly 75 percent of stock investors wouldn’t be subject to an increase in the capital gains tax rate due to the types of accounts they own, according to UBS.
The announcement is expected to come Wednesday night, when the president makes his first address to Congress, where he will outline his American Families Plan and how he’ll use tax hikes to help pay for the multi-trillion proposal, which includes education, labor programs, universal pre-K, free college tuition for certain income levels, and other programs.
Brian Deese, the director of the National Economic Council, emphasized the capital gains hike would affect a small number of Americans – about three-tenths of 1 per cent or about 500,000 people.
White House officials defended Joe Biden’s tax hike on the wealthy to pay for his $1.8 trillion ‘human infrastructure’ plan but couldn’t address some specifics what the president has planned
Joe Biden’s tax hikes targeting the rich: Who will have to pay
Capital gains tax on investment sales for those earning more than $1million a year:
Current law: 20%
With an effective rate of 43.4% when the Medicare surcharge is added.
Investors currently pay 23.8% as the top capital gains rate along with the 3.8% net investment income tax, known as the Medicare surtax.
Around 500,000 people in the US, or 0.32% of the population, have recorded a gross income of over $1million.
For those earning more than $1 million in high-tax states, the total rate will be even higher given the combined federal and state tax capital gains.
In New York it could be as high as 52.22% and for Californians it could be 56.7%
Wealthy residents pay Capital Gains on the growth in value of investments when they are sold. They are mainly placed on profitable stock trades and real estate deals. They can also apply to sales of collectible cars, art, businesses, gold.
Investors are taxed on the difference between what they paid for the asset and what they sold it for.
Investments held for at least one year tops out at 20% and those held under a year are taxed the same as salaries and wages. An additional 3.8% tax applies to those earning at least $200,000.
The US rate ranks in the middle of countries around the world.
Investors generally support lower capital gains tax because they say it rewards entrepreneurship and encourages people to sell what they own.
Current top rate: 21%
Proposed top rate: 28%
These hikes have already been proposed in the first part of his infrastructure plan.
He is also targeting US firms’ profits overseas and companies who use offshore businesses.
Biden has still vowed that no one earning under $400,000 a year will pay more taxes in his administration.
Currently, people earning more than $200,000 pay a capital gains rate of about 23.8%, including the 3.8% net investment tax which helps fund the Affordable Care Act. Under the new plan, wealthy Americans could face an overall federal capital gains tax rate of 43.4% including the Obamacare tax.
‘We need to do something about equalizing the taxation of work and wealth in this country,’ Deese noted. ‘And that’s why the reforms that the president will lay out are focused on this top sliver of people.’
Republicans have criticized the tax hike, charging it will cut down on investment and cause unemployment.
One point of confusion is whether the tax hike would apply to households or individuals. Deese said ‘households,’ noting the tax raise affects the ‘top sliver of households.’
The issue of household versus individuals is of particular interest to high-income households in cities like New York and San Francisco, where the cost of living is higher than the rest of the country. For those earning more than $1 million a year in high-tax states like New York and California, their total rate could be above 50 per cent.
Those areas are also mainly represented by Democrats, who would have to explain the tax hikes to their constituents.
White House press secretary Jen Psaki declined to answer whether individuals or households would be impacted.
‘I am not going to get into more specifics,’ she said, ‘but we’ve been quite careful about not getting head of the president.’
While she stood firm on Biden’s campaign pledge not to raise taxes on those earning more than $400,000 per year, she noted: ‘He believes that the burden should be on the backs of corporations and high level income people.’
In his address to the Joint Session of Congress on Wednesday evening, Biden will tout his accomplishments in his first 100 days in office and expand his vision for the next stage of his presidency.
The speech will be a fraction of its traditional size – only 200 people in the House chamber as opposed to the usual 1,600due to coronavirus restrictions – but will be large in scope.
He’ll cover a range of topics – COVID-19, police reform, and immigration. But the main focus will be the next phase in his plan to help the US economy recover from the coronavirus pandemic – his $1.8 trillion families plan.
‘He will lay out the specific details of the American Families Plan,’ Psaki said Monday. “He will also talk about a range of priorities that he has for the upcoming months of his presidency.’
She said that included police reform and expanding access to affordable healthcare.
But Psaki could not say whether or not Biden would wear a face mask during his remarks. House rules require a face covering be worn at all times, even when speaking on the House floor.
Brian Deese, the director of the National Economic Council, said tax hike on capital gains will only affect 500,000 people while White House press secretary Jen Psaki declined to answer whether individuals or households would be impacted by the change
When he addresses the nation, Biden will have a historic backdrop behind him: Speaker Nancy Pelosi and Vice President Kamala Harris – two women in the frame as he speaks.
Biden plans to note the historic occasion at the beginning of his speech, The Washington Post reported. Both women will wear face masks in keeping with coronavirus restrictions put in place in the House chamber.
The 200 guests – which will include first lady Jill Biden and second gentleman Doug Emhoff – will be spread out on the House floor and in the balconies above to keep with social distancing guidelines.
No lawmaker will be allowed to bring a guest and only one Supreme Court justice, Chief Justice John Roberts, is expected to attend. Gen. Mark Milley, chairman of the Joint Chiefs of Staff, will represent the military. Traditionally multiple justices on the high court along and members of the Joint Chiefs attend with most of the Cabinet.
Psaki said on Thursday that most senior White House staff and officials will be watching Biden’s remarks from home. Many Republicans are expected to boycott.
Here’s a look at the some of the items Biden is expected to address during the speech:
AMERICAN FAMILIES PLAN
Biden will reveal his ‘human infrastructure’ plan – American Families Plan – with its $1.8 trillion price tag.
American Families Plan
American Families Plan may include the following items but White House aides stress it is subject to change:
$300 billion in education funding, which includes funding to make two-year community colleges tuition-free
$225 billion in child-care funding
$225 billion for paid family and medical leave
$200 billion for prekindergarten instruction
$200 billion to extend more enhanced Affordable Care Act subsidies
$400 billion to extend the child tax credit until 2025
– The Washington Post
It will focus on social programs such as national child care, prekindergarten, paid family leave and tuition-free community college.
‘A core of that will be him laying out the specifics of the American Families Plan, his commitment to child care, to education, and to delivering on those middle class priorities,’ Psaki said last week.
The plan remains a work in progress with some items becoming a point of contention among Democrats. Democratic leadership on Capitol Hill, for example, wants to include lowering the cost of prescription drugs, a move opposed by the pharmaceutical industry. The White House was looking to cut it but Speaker Nancy Pelosi is among those lobbying for it to stay in.
Deese refused to preview whether or not it would be in Biden’s speech.
‘Right now, I am not going to confirm whether or not that is in. I can say that the president has long focused on the issue of rising cost of prescription drugs for American consumers and American families,’ he said. ‘It’s something that he continues to focus on and prioritize but I’m going to let him speak to those issues in the speech.’
There is also an internecine battle over health care. Progressives want additional funds to expand Medicaid. Moderate in the Democratic Party want to expand the Affordable Care Act.
Republicans are expected to oppose the entire package, which follows Biden’s $1.9 trillion COVID relief measure. His $2 trillion infrastructure package is working its way through the legislative process. Republicans have already offered a scaled back counter proposal for a fourth of the cost and keeps the focus on traditional infrastructure items.
Top pay for his American Families Plan, Biden wants to hike the top income tax rate back to where it was before the Trump tax cuts and nearly double capital gains rates for top earners.
The president would push the top income tax rate up to 39.6 per cent – where it was before President Donald Trump’s 2017 tax cuts. Capital gains – where Biden has already called for changes to end a major ‘loophole,’ would jack up rates from their current 20 per cent for those earning more than $1 million.
Biden has pledged only to raise taxes on households making more than $400,000. But the administration hasn’t been clear as to whether that limit applies to individual earnings or combined household – a distinction that makes a big difference especially in areas on the East and West Coasts where the cost of living is high.
Biden is also expected to address police reform in his speech, which will be his most high-profile public address since his remarks on Inauguration Day.
‘He believes the bar for convicting officers is too high,’ Psaki said last week. ‘It needs to be changed.’
Police reform has returned to the forefront of public discourse in the wake of Derek Chauvin being convicted of murder and manslaughter in the death of George Floyd. Biden addressed the nation in the aftermath of the verdict.
Psaki said Biden supports a bill that would ban chokeholds and require that deadly force only be used as a last resort in arrests.
That bill has passed in the House of Representatives but faces a rough time in the closely divided Senate.
President Biden is expected to talk about police reform in the wake of the Derek Chauvin trial in the death of George Floyd
Biden is expected to address immigration reform in some fashion.
His immigration proposal – unveiled in March via Democrats on Capitol Hill – offers an eight-year path to citizenship for most of the 11 million undocumented immigrants in the United States, eliminates restrictions on family-based immigration and expands worker visas.
What is unclear is how he will address the situation on the US-Mexico border where a record number of migrants are crossing illegally.
In March, US Custom and Border Patrol apprehended 18,656 unaccompanied minors at the southern border, a record since at least October 2009 and double February’s numbers.
The U.S. Citizenship Act of 2021 and does not include a large focus on increased border enforcement. And Biden has stopped work on Trump’s border wall.
Biden tapped Vice President Harris to deal with the diplomatic aspect of the crisis. She has yet to visit the border but she does plan to visit Central America in June.
The administration has refused to call the situation at the border a ‘crisis.’ When Biden did use that word to describe the situation, the White House quickly walked it back.
‘The president does not feel that children coming to our border, seeking refuge from violence, economic hardships and other dire circumstances is a crisis,’ Psaki said.
President Joe Biden will talk about immigration reform but it’s unclear how or if he’ll talk about the situation at the border – above migrants and asylum seekers are seen after spending the night in one of the car lanes off the San Ysidro Crossing Port on the Mexican side of the border
Senator Tim Scott of South Carolina will give the GOP response to Biden’s remarks.
Scott, the lone black Republican in the Senate, has taken the lead on police reform for his party.
‘I’m excited and honored for this opportunity to address the nation,’ he said. ‘I look forward to having an honest conversation with the American people and sharing Republicans’ optimistic vision for expanding opportunity and empowering working families.’
The response to a presidential address is seen as a possible star-making role for a member of the opposing party. Stacey Abrams gave the response for Democrats to one of President Donald Trump’s State of the Union addresses.
But the platform also can be fraught with peril. There is a long list of politicians on both sides of the aisle who have bombed – Senator Marco Rubio famously stopped speaking to take a drink of water when he gave the response to one of Barack Obama’s speeches.
By picking Scott, GOP leaders focused their response to the president on Congress and the role it will play in countering Biden’s legislative agenda as opposed to picking a Republican who is weighing a 2024 presidential bid.
Scott is set to introduce his police reform bill in a few weeks and has spoken a potential compromise with Democrats Rep. Karen Bass and Sen. Cory Booker.
‘I think we are on the verge of wrapping this up in the next week or two, depending on how quickly they respond to our suggestions,’ Scott told reporters.
Republicans have criticized for Biden for not doing more to reach out to them as part of his promise to unify the country. They claim his policies are out of touch with mainstream Americans.
‘Nobody is better at communicating why far-left policies fail working Americans,’ said Senate Republican Leader Mitch McConnell in announcing Scott will give the party’s response.
As for the final text of Biden’s remarks, Psaki noted it’s still being worked on.
‘We’re working through’ the content and what will make the final cut, she said at Thursday’s press briefing, adding ‘unless you want to sit through a seven hour speech, which I don’t think you do.’
Biden’s first 100 days: where he stands on key promises
As he rounds out his first 100 days in office, President Joe Biden’s focus on reining in the coronavirus during the early months of his administration seems to have paid off: He can check off nearly all his campaign promises centered on the pandemic.
Biden has delivered on a number of his biggest campaign pledges focused on climate change and the economy as well. But some issues have proved to be tougher for the administration – including immigration, where Biden is grappling with how to enact promised reforms in the face of a steep increase in unaccompanied minors seeking to cross the border. On some of his promises, Biden is waiting for Congress to act.
Where Biden stands on some of his key promises:
– Raise refugee cap to 125,000, up from the 15,000 set by President Donald Trump.
Nowhere close. The White House first said it would stick to Trump’s 15,000 cap due to “humanitarian concerns.” After facing backlash from Democrats, it shifted gears and said Biden would increase the historically low cap on refugees set by Trump – but probably not all the way to the 62,500 that Biden previously had planned. And the numbers actually admitted this year are likely to be closer to 15,000.
– Surge humanitarian resources to the border and encourage public-private partnerships to deal with an increase in migration there.
Yes, but is it enough? The Department of Homeland Security has deployed the Federal Emergency Management Agency to help deal with the major increase of border arrivals, and Biden signed an executive order asking officials to prepare plans for using humanitarian resources there. He has yet to establish any new public-private partnerships. The largest number of unaccompanied children ever at the border created massive overcrowding at Customs and Border Protection facilities and set off a mad scramble for temporary space at convention centers, military bases and other large venues.
– Reform the U.S. asylum system.
Incomplete. Biden signed an executive order in February directing his officials to craft a strategy for migration, including refugees and asylum seekers. Biden has promised to unveil a new “humane” asylum system but he and his aides have been mum on timing and offered no specifics. He´s eliminated some Trump-era policies, like a requirement that new asylum seekers wait in Mexico. But he has kept a Trump-era policy that allows Customs and Border Protection to expel migrants who enter the country without authorization to avoid the spread of COVID-19. And Biden has yet to articulate a plan to manage asylum flows beyond proposing that billions of dollars be spent to address root causes in Central America.
– Deliver a comprehensive immigration reform bill to Congress within his first 100 days.
– End travel restrictions on people from a number of Muslim-majority countries.
– Reverse Trump-era order expanding criteria for deporting immigrants and return to Obama-era principle of prioritizing deportations of immigrants posing a national security, border security or public health risk.
– Stop funding and building the border wall.
– Reverse Trump´s public charge rule discouraging immigrants from using public benefits.
– Restore the Obama-era principle of deporting foreigners who are seen as posing a national security threat or who have committed crimes in addition to the crime of illegal entry.
– Freeze deportations for 100 days.
Attempted, but blocked in court.
– Streamline and improve the naturalization process for green card holders.
In progress. Biden signed an executive order in February ordering a plan to improve the naturalization process, and the Department of Homeland Security has since revoked some Trump-era rules, sought public input into naturalization barriers and reverted to a 2008 version of the U.S. civics test for applicants, considered more accessible than the Trump-era revamp.
– End family separation and create task force to reunite families separated at the border.
In progress. Biden signed executive orders ending the policy and establishing a task force focused on reuniting families. The task force is making slow progress as it pores over thousands of records.
– Order a review of Temporary Protected Status.
No review has been ordered, but Biden´s Department of Homeland Security has granted TPS for Venezuelans and Burmese, extended it for Syrians and extended a related program for Liberians.
– Convene a regional meeting of leaders, including officials from El Salvador, Guatemala, Honduras, Mexico and Canada, to address the factors driving migration and propose a regional resettlement solution.
Not yet. Vice President Kamala Harris, tasked with dealing with the root causes of migration, has spoken to the leaders of Mexico and Guatemala, but no regional meeting is on the horizon.
– Protect those often described as “Dreamers” – young immigrants brought to the U.S. illegally by their parents – and their families by reinstating DACA, the Obama-era policy defending them from deportation.
Homeland Security Secretary Alejandro Mayorkas said in March his agency was issuing a rule to “preserve and fortify DACA,” but the policy faces a Texas court challenge that could invalidate protections for those often described as “dreamers.”
– Ensure that personnel within Immigration and Customs Enforcement and within Customs and Border Protection abide by professional standards and are held accountable for inhumane treatment.
Biden included funding for training and investigating misconduct in his immigration bill and in the budget he proposed to Congress. His administration has faced questions about allegations of abuse in at least one Texas facility, which are being investigated.
– End prolonged migrant detention and invest in a case-management system to process people.
There´s been no announcement of added investments in case-management systems. The administration did roll out plans to release parents and children within 72 hours of their arrival in the United States in March. Officials subsequently acknowledged that hundreds of children have been held by Border Patrol for much longer, due to an increase in unaccompanied minors arriving at the border and a lack of facilities to house them.
– Reverse transgender military ban.
– Establish police oversight board.
Abandoned. The Biden administration said it was scrapping the idea, after consultations with civil rights groups and police unions that said it would be counterproductive.
– Direct attorney general to deliver a list of recommendations for restructuring the Bureau of Alcohol, Tobacco, Firearms and Explosives and other Justice Department agencies to better enforce gun laws.
– Direct FBI to issue report on delays in background checks for gun purchases.
– Reauthorize Violence Against Women Act
Requires congressional action.
– Sign Equality Act
Requires congressional action.
– Create Cabinet-level working group focused on promoting union organizing tasked with delivering a plan to increase union density and address economic inequality.
– Rejoin World Health Organization.
– Ensure 100 million vaccines have been administered before the end of his first 100 days, later increased to 200 million.
– Increase access to testing and establish pandemic testing board.
– Issue mask mandate on federal property and ask Americans to wear masks for 100 days.
– Extend nationwide restrictions on home evictions and foreclosures.
– Continue to pause student loan payments.
– Safely reopen a majority of K-8 schools.
According to data collected by Burbio, a school-tracking site, as of April 18 62% of schools offered in-person learning every day. It´s unclear what percentage of those schools are elementary schools.
– Push for passage of $1.9 trillion COVID-19 relief legislative package.
Done; the bill passed in March.
– Rescind Keystone XL oil pipeline permit, protect the Arctic National Wildlife Reserve, rejoin the Paris climate agreement and embrace the Kigali Amendment to the Montreal Protocol to reduce harmful hydrofluorocarbons, or HFC´s.
– Convene climate world summit and persuade nations to set more ambitious emissions pledges.
– Ban new oil and gas leases on federal lands and offshore waters.
Sort of – he’s imposed an indefinite moratorium on new oil and gas leases on federal lands and waters.
– Reverse Trump rollbacks on 100 public health and environmental rules.
In progress. Biden signed an executive order on Inauguration Day ordering a review of Trump-era rules on the environment, public health and science, and has begun the process of rolling back some.
– Roll back Trump’s 2017 cuts to corporate tax rates.
In progress. Biden has proposed raising the corporate tax rate to 28% from the 21% rate set by Trump’s 2017 overhaul of the tax code.
– Provide $2,000 in direct payments as part of COVID-19 relief.
Done. The aid package approved right before Biden became president offered $600 in direct payments to eligible Americans. Biden said the payment should have been $2,000. His $1.9 trillion relief package included $1,400 in additional direct payments, which with the prior round adds up to $2,000.
– Pause federal student debt payments.
– Order a review of U.S. supply chains.
– “End the forever wars in Afghanistan and the Middle East” and terminate U.S. involvement in the Yemen civil war.
In progress. Biden announced that the American troop withdrawal from Afghanistan would begin by May 1 and the redeployment would be done no later than Sept. 11. Biden announced he was ending American support for the five-year Saudi Arabia-led military offensive in Yemen.
– Put human rights at the center of foreign policy.
Mixed. Biden has directly raised concerns with Chinese President Xi Jinping on Hong Kong, human rights abuses against Uyghur and ethnic minorities in the western Xinjiang province, and its actions toward Taiwan. He´s repeatedly raised concerns about the jailing and treatment of Russian opposition leader Alexei Navalny. But Biden declined to hold Saudi Arabia´s crown prince, Mohammed bin Salman, directly responsible for the killing of U.S.-based journalist Jamal Khashoggi even after the publication of U.S. intelligence showing Salman approved of the hit.
– Improving relations with allies who had rocky relations with Trump.
Mostly accomplished. Allies like Canada´s Justin Trudeau and Germany´s Angela Merkel, who had stormy relationships with Trump, have praised Biden for his efforts reclaim U.S. leadership on climate issues, and leaders in the Indo-Pacific have been pleased by early efforts at coordination on China policy.
– Reversing the embrace of “dictators and tyrants like Putin and Kim Jong Un.”
Mostly accomplished. Biden has levied two rounds of sanctions against the Russians. His administration decided to be measured in its approach with Putin and has said that he´s interested in finding areas where the U.S. and Russia can find common ground. Biden´s team acknowledges they have sought to reengage with North Korea, but have been rebuffed.
– Quickly rejoin the nuclear deal with Iran so long as Tehran comes back into compliance.
Mixed. Indirect talks are under way among other signatories of the 2015 deal, including British, German, French, Chinese and Russian officials, with American officials down the hall. But the path forward is less than certain as Tehran has thus far refused to come into compliance with the old deal without sanctions relief and it recently began enriching uranium to its highest purity ever.
– Recognize World War I-era atrocities against Armenians as genocide.
Completed. As a candidate, Biden said, if elected, he’d make it U.S. policy to recognize the killings and mass deportations by Ottoman Empire forces of hundreds of thousands of Armenians more than a century ago – something past presidents have avoided doing out of concern of angering strategic ally Turkey. Biden followed through on the promise on the annual commemoration Armenian Genocide Remembrance Day. Turkey swiftly condemned the move.
– Associated Press