82 unions and liberal groups urge Biden to go bigger on tax hikes and hold the wealthy accountable

joe biden
President Joe Biden.

  • 82 liberal groups urged Biden to go bigger on tax hikes and hold the wealthy accountable.
  • They cited Biden’s campaign proposals of reversing Trump’s tax cuts and investing in IRS enforcement.
  • Despite GOP opposition in Congress, the majority of Republican voters support tax increases.
  • See more stories on Insider’s business page.

President Joe Biden is unveiling the first part of his multitrillion-dollar infrastructure proposal today, which could include up to $3.5 trillion in tax hikes. Some unions and progressive organizations are saying he should go even bigger.

On Tuesday, 81 national organizations, led by Americans for Tax Fairness, sent a letter to Biden and Vice President Kamala Harris, commending the administration’s efforts to raise taxes on the wealthiest Americans and encouraging the president to go further. The letter said Biden’s tax plans were the “boldest of any major party presidential nominee in modern American history.”

The tax proposals have “received widespread media coverage and, perhaps more significant, your boldly progressive tax plan was heavily attacked by your political opponents, who spent untold millions of dollars and claimed falsely that the middle-class would pay more,” the letter said. “Yet, you won the most votes ever of any US presidential candidate, with a central promise of your campaign to make the rich and corporations pay their fair share of taxes. You have a clear mandate to pursue your agenda.”

The letter, which was signed by AFL-CIO and MoveOn, said that even among Republicans, raising taxes is popular. For example, a New York Times survey from November found that two-thirds of respondents, including 45% of Republican voters, supported tax increases on people making over $400,000, and an Americans for Tax Fairness survey from October found that 71% of Americans supported raising the income tax rate, including 51% of Republicans.

The best way to hold the wealthy accountable, according to the letter, is to reverse the “worst aspects” of former President Donald Trump’s Tax Cuts and Jobs Act (TCJA), including Biden’s proposals to:

  • Lift the corporate tax rate to 28% from the current 21%;
  • Restore the estate tax to its 2009 levels, meaning that still only the richest 0.59% of estates would get taxed;
  • And return the top marginal tax rate on the highest incomes to 39.6%, from the current 37%.

Aside from the TCJA proposed changes, Biden also proposed additional tax reforms during his campaign, like investing in Internal Revenue Service enforcement of high-income taxpayers and imposing a “financial-risk fee” on large Wall Street banks.

The letter said that even along with Biden’s campaign proposals, he could implement many other reforms, including a 10-percentage-point surtax on all incomes about $2 million, a financial transaction tax on bond and stock trades, and a wealth tax on ultra-millionaires.

Biden’s tax hikes have already faced opposition in Congress. While moderate Democratic Sen. Joe Manchin said an infrastructure proposal could be as large as $4 trillion using tax hikes as funding, Senate Minority Leader Mitch McConnell warned that won’t win his party’s support.

“I don’t think there’s going to be any enthusiasm on our side for a tax increase,” McConnell told reporters last week. Republicans even recently introduced a bill to repeal the estate tax, which would only affect 0.6% of farm estates.

But progressive lawmakers are continuing to push for measures that hold the ultra-rich accountable. Although Politico reported on Tuesday that Biden will not use a wealth tax to fund infrastructure, Sen. Elizabeth Warren of Massachusetts has led the effort to propose a 2% tax on households with net worths over $50 million.

“A wealth tax is critical for raising revenue, and that revenue is critical for raising opportunity,” Warren said on Twitter on March 1. “We build a future for all of our kids by investing in opportunity. This is one way we can make this government work for everyone – not just the rich and powerful.”

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Democrats want a wealth tax and Republicans want another tax cut

Senate Majority Leader Mitch McConnell of Ky., speaks during a news conference with other Senate Republicans on Capitol Hill in Washington, Tuesday, Dec. 15, 2020. Sen. John Barrasso, R-Wyo., second from left, and John Thune, R-S.D., second from right listen.
Senate Minority Leader Mitch McConnell with Sens. John Barrasso (R-WY), second from left, John Thune (R-SD), second from right, and Roy Blunt (R-MO).

  • Republicans reintroduced a bill to repeal the estate tax, which affects less than 2,000 households.
  • The GOP lawmakers claim this will help farm estates, but USDA data show only 0.6% would be affected.
  • This legislation comes eight days after Democrats introduced an ultramillionare tax.
  • See more stories on Insider’s business page.

Eight days after the Democrats introduced an ultramillionaire tax proposal on the richest American households, Republican lawmakers proposed less taxes on the wealthy by means of a federal estate tax repeal.

The estate tax is a tax on a person’s right to transfer property after death, but it only applied to estates valued at over $11.7 million in 2021. A 2020 estimate by the Tax Policy Center found that fewer than 2,000 households would have to pay the estate tax in 2020, given this high threshold. But Republican Sens. John Kennedy of Louisiana and John Thune of South Dakota want to permanently repeal all of that with their Death Tax Repeal Act of 2021.

“The death tax is lethal to many family-run businesses and farms,” Kennedy said in a statement. “Louisianians shouldn’t lose a legacy of family work to a punishing, illogical tax burden. By ending the death tax, we can make it easier for families to pass their farms and businesses to the next generation.”

However, data from the Dept. of Agriculture revealed that farm estates did not actually bear much of the brunt of estate taxes. In 2020, the USDA forecasted that only 0.6% of the 31,394 farm estates would be required to file an estate tax return, and only 0.16% of those estates would have an estate tax liability.

Thune and Kennedy did not immediately respond to Insider’s request for comment.

The Republicans’ legislation came after Democrats introduced an ultramillionaire tax on the top 0.05% of Americans households on March 1, led by Sen. Elizabeth Warren of Massachusetts, which would place a 2% tax on household net worth between $50 million and $1 billion and a 3% tax on household net worth over $1 billion.

“A wealth tax is popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations,” Warren said in a statement.

Taxing the wealthy has often been a partisan issue in Congress. During a speech in 2017, former President Donald Trump called the federal estate tax a “tremendous burden” on family farmers and said he would not allow “the death tax or the inheritance tax or the whatever-you-want-to-call-it to crush the American Dream.”

The reintroduction of the tax repeal also comes as President Joe Biden signed his $1.9 trillion stimulus into law on Thursday, offering significant assistance to low-income families while cutting out those earning above $80,000 from receiving $1,400 stimulus checks.

“To Speaker Pelosi, Majority Leader Schumer, and everyone who voted for the American Rescue Plan – thank you,” Biden said on Twitter on Wednesday. “This is a historic victory for the American people.”

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