More taxes on the rich, Biden’s formula against inequality
During his State of the Nation address, President Biden said he supports legislation that allows the government to tax income and wealth at a greater rate.
The Democrats are a big-tent party dominated by liberal centrists but home to a growing number of progressives seeking to disrupt Washington’s status quo.
President Biden has worked in Washington since the early 1970s and has historically taken a moderate and emphatically capitalist position. For the Biden administration to bring all of the factions of his party together, he has had to move to the left without abandoning more moderate members of the caucus.
One of the most controversial topics within the party is taxation, particularly the question of what tax rates should be applied to the super-rich and corporations. During the campaign, then candidate-Biden, proposed a review of the US tax law to guarantee a fairer distribution of wealth. There is a strong desire to see reforms passed in Washington that decrease income and wealth inequality in the country.
In the US, the bottom fifty percent of income earners own only 14.6 percent of real estate, meaning many families are left unable to build generational wealth through home ownership. As a share of the country’s net worth, this group only owns 3.3 percent, down a percent from the early 1990s. Meanwhile, the top one percent of earners control nearly a third of the country’s wealth.
Between 2018 and 2020, the 400 richest families in the United States paid an average of 8% in taxes, an amount that is comparatively less than what a middle-class family contributes.
Although the tense situation with China was what made the big headlines about Biden’s State of the Union address, strong words were also dedicated to the economic challenge of inequality.
The president argued during his speech that it was time that the rich paid their fair share and that it is wrong for a billionaire to pay a lower effective tax rate than nurses, teachers, and firefighters. However, with a divided Congress, the prospects of altering the tax code to favor working-class families are slim. On the campaign trail last year, conservative lawmakers said they would block any attempt to overhaul the US tax system.
What has President Biden proposed?
Biden’s proposal sets a minimum tax rate of fifteen percent for billionaires and large companies. The rate would increase to twenty percent for those who generate more than $100 million annually.
These sorts of proposals, which, to be clear, never made it to the House or Senate floor when Democrats controlled both chambers, tend to trigger criticism from Republicans. Accusations often begin to fly that the White House is run by a socialist or, even more threatening, a communist. To deflect this criticism the administration has released several statements affirming the president’s respect for capitalism and its logic.
Last March, the White House released a statement affirming that “President Biden is a capitalist” who “believes that anyone should be able to become a millionaire or a billionaire.” Some leaders and voters to the left of the president reject this notion because they believe the idea that global labor conditions allow a person to amass hundreds of millions or billions of dollars without exploiting workers is false. For President Biden, how one’s wealth is created is not the problem. Instead, he takes issue with the tax code “that results in America’s wealthiest households paying a lower tax rate than working families.”
With Republicans in control of the House of Representatives, Democrats will have to wait to enact changes like that proposed by the president. However, as progressive podcaster Will Menaker pointed out on Twitter, the talking point of “corporations paying their fair share” has long been part of Democratic messaging.
Nevertheless, whenever the party has control over Congress and the White House, they have failed to make any real changes to bring about such a reality.