To boost America’s competitiveness and regenerate its middle class, President Joe Biden on Wednesday proposed a massive new spending plan on family aid and education, which he wants to fund by making the rich pay “their fair share.”
This “Plan for American Families” represents investments of 1.8 trillion dollars in 10 years, and adds to the infrastructure plan of 2 trillion dollars already promoted by the Democratic president and that is still far from being approved by Congress. .
It also follows the $ 1.9 trillion COVID-19 pandemic aid package, which has already allowed the delivery of checks for $ 1,400 to American families.
“We are competing with China and other countries to win the 21st century. We have to do more than rebuild, we have to build better,” Biden said in his first speech to Congress, calling for a “buy American.”
“To win this competition, we must make the investments of a generation in our families,” continued the president.
To fiscally finance that spending, one of the star measures of the plan reverses what was granted to the richest classes by Donald Trump’s 2017 tax reforms.
“It is time for American businesses and the richest 1% of Americans to pay their fair share,” the president said.
Under Biden’s proposal, the maximum tax rate for individuals would go from 37% to 39.6%, but it would only affect the richest 1% of households.
The same would happen with capital gains, such as stock market operations, which so far enjoy a tax rate of 20% and which could now also be taxed at 39.6% for those who earn more than a million dollars a year. These richest Americans make up just 0.3% of taxpayers, according to the Biden administration.
The measures are expected to generate $ 700 billion in financing over 10 years, according to the Treasury.
The plan also includes the modernization of the tax agency with investments of 80,000 million dollars, after the Treasury targeted the 1% of the richest who do not declare about 20% of their income to the treasury. This represents a tax revenue shortfall of $ 175 billion, according to the administration.
“Critics are concerned that raising taxes on financial gains will reduce investor returns and cause equity prices to fall, but individual investors actually own only one-third of the shares” in the market. said the Tax Policy Center research institute.
– Invest in the middle class –
In the opinion of a market analyst, Peter Cardillo of Spartan Capital Securities, the proposed tax increases on financial earnings have already been discounted by the market. “I don’t think it will derail the market or investor sentiment,” he said.
The Biden administration wants to reinvest this income in the middle class.
The plan focuses on education, from kindergarten through college. If approved, it would provide free tuition for the first two years of kindergarten and two years of community college as well.
According to the administration, schooling from kindergarten would end up contributing to the country’s GDP three times more than it costs.
The project also proposes to increase tax credits for families with children and to subsidize the cost of childcare, based on income.
Republicans oppose this spending, which also worries supporters of budget orthodoxy: “Congress should follow the example of the president,” acknowledges the Committee for a Responsible Federal Budget, a centrist organization.
“But we must not lose sight of the prospects for a high and growing debt burden,” the organization adds, given that US public debt is already equal to the country’s gross domestic product.
For the conservative Heritage Foundation, the financial support provided by the government is seen as interference: “American families would be better off keeping their income to spend on what they know is best for them, rather than letting the government take their money. and redistribute it through benefits decided by politicians, “said a spokeswoman.