- In a Wednesday address, President Joe Biden gave an impassioned defense of his proposed tax hikes.
- Biden wants to hike taxes on corporations and Americans making over $400,000 a year.
- He said the rates he’s proposing have historical precedent, and he wants to offset spending.
- See more stories on Insider’s business page.
While answering questions after a Wednesday address on the impact of the American Rescue Plan, President Joe Biden doubled down on his tax proposals and the need for wealthier Americans and corporations to pay their fair share – and took aim at prior Republican tax cuts.
“My Republican friends had no problem voting to pass a tax proposal – it expires in 2025 – that costs $2 trillion,” Biden said, adding that none of that was paid for. In fact, he said, it “gave the overwhelming percentage of those tax breaks to people who didn’t need it. The top one tenth of 1% didn’t need it.”
As for the argument Republicans gave in 2017, that it would generate a “great economic surge and growth,” Biden said “everyone from the Heritage Foundation on has pointed out it hadn’t done that.”
Then he turned to his plans to hike taxes.
“The biggest 35 or 30 corporations didn’t pay a single solitary penny last year, and they’re Fortune 500 companies,” Biden said. “They made $400 billion. They paid no taxes. How can that make any sense?”
Biden said sometime in the 2000s – he’d have his staff supply the exact date – the average CEO of a Fortune 500 company made about 36 times what the average employee of that corporation made.
“It’s over 450 times as much now. As my mother would say, who died and left them boss?” he said before raising his voice while questioning how it can benefit the economy to have CEOs make so much more than workers. “No, seriously, what rationale, tell me what benefit flows from that?”
“We’re not going to deprive” any executive “of their second or third home” or traveling privately by jet, he said.
“It’s not going to affect your standard of living at all. Not a little tiny bit,” Biden said, raising his voice, “while I can affect the standard of living of people I grew up with.”
Biden has proposed a slew of tax measures to offset the proposed spending in his two-pronged infrastructure package. Those include raising the income tax rate for the wealthiest Americans to 39.6%, bringing up the capital gains rate to the same level, and increasing the corporate tax rate from 21% to 28%. The corporate tax rate was one measure that was slashed under Trump’s tax package, falling from 35% to 21%.
Biden said he was open to compromising on the corporate tax rate – some Democrats have floated an increase to 25%, instead of 28% – but said he still wants to offset spending.
“I’m willing to compromise, but I’m not willing to not pay for what we’re talking about,” he said.
Inequality expert Sarah Anderson has testified in front of the Senate Budget Committee that the yearly gap between CEO pay and the pay of average workers is about 350 to 1.
Overall, the tax burden of Biden’s proposal would fall squarely on the top 1% of American tax filers, who would pay an average additional $100,000 per year. Biden addressed his proposal to raise the income tax rate to 39.6% for Americans making over $400,000, which he noted was a return to the Bush-era level.
“Just raise it back to what it was before. It raises enough money from that savings to put every single person in community college who wants to go,” he said. On that topic, he posed a question: “What’s going to grow America more?” The options, he said, are “the super wealthy having to pay 3.9% less tax” or an entire generation “of Americans having associate degrees.”
In closing, Biden said: “This is about making the average multimillionaire pay just a fair share. It’s not going to affect their standard of living” – pausing to whisper – “a little bit.”