As he also proposed last year, Biden would quadruple the IRA’s itty-bitty buyback tax from 1 cent on the dollar to 4. Biden also repeats his proposal to raise the top capital gains rate, which Trump lowered in 2017 to 20 percent, all the way up to 39.6 percent, bringing the top bracket for capital gains in line with the top bracket for labor income. It makes no sense to tax labor at a higher rate than capital. Biden would also eliminate various loopholes that benefit the rich, including the carried interest loophole, which Senator Kyrsten Sinema wouldn’t let him kill two years ago. And to help deal with Medicare’s pending funding shortfall, Biden would increase the Medicare taxes on people earning more than $400,000 from 3.8 percent to 5 percent.
Biden didn’t put all these proposals into his budget because he thinks Congress will consider passing them. He put them in there to say: I dare you to oppose them. Any Republican who opposes Biden’s tax proposals will have to explain their hesitation to increase taxes on the rich. The threshold to count as the “one percent” is $650,000, but $400,000 isn’t exactly poor. Even Republicans favor, by a 46 percent plurality, higher taxes on people earning more than $400,000, according to an April 2023 survey by the Pew Research Center.
The main target is, of course, Trump, whose advisers reportedly want to drop the corporate tax rate to 15 percent and lower the top income tax rate possibly all the way down to 30 percent, paying for this with a 10 percent tariff on all imported goods that Trump’s embraced publicly. Since tariffs raise prices, that would effectively shift the tax burden from corporations and the rich to consumers, which of course is regressive. There’s talk of capping the capital gains tax at 15 percent. Not all these details can be attributed to Trumpworld, but they’re all part of the GOP agenda, which has a tendency to become policy whenever a Republican president is in the White House.