Photo Credit: REUTERS/Elizabeth Frantz
Joe Biden, the President of United States has proposed a new tax plan that would affect some major corporations and wealthy individuals. The move is being seen as an attempt by him to tackle income inequality in America which was one of the major key points for the president’s campaign during the last national election. Lawmakers broadly supported the idea.
Biden was optimistic about the possibility of passing his bill in Congress but it never happened. This is due to several reasons, including some Democrats who opposed raising taxes and even more Republicans joining them on the issue. However, things changed when Senator Joe Manchin, a Democrat from West Virginia spoke in favor of the bill and reversed his former decision.
For decades, since the 1940s, companies have contributed a low percentage of the total tax revenue of the US.
The bill supported by Joe Biden would enforce a 15% minimum tax on corporations with at least $1 billion in profits. If this law passes, it’s estimated that more than $313 billion will be collected within just a decade.
Biden has long been an advocate for companies paying their “fair share.”
Taxable corporations pay less than the rates imposed upon them. In fact, some large companies do not pay federal taxes. The conditions were also ruling in their favor when former President Trump lobbied and succeeded in reducing corporate tax from 35% down to 21%.
When Biden became president, he made it his mission to increase the rate. Last year, Biden proposed to raise the tax rate from 21% all the way up to 28%. However, the proposition was blocked in Congress.
One of the main proponents of the bill, Senate Majority Leader Chuck Schumer, the bill would be voted on next week and he hopes that apart from the increase of corporate tax rates, the Congress will also discuss matters like “lower prescription drug prices, tackle the climate crisis with urgency and vigor, ensure the wealthiest corporations and individuals pay their fair share in taxes, and reduce the deficit.”
Meanwhile, Senate Manchin said, “Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination.”
Senator Manchin has confirmed that this new legislation will increase taxes on the wealthy, but the bill, called the Inflation Reduction Act of 2022, is not like what Democrats had proposed previously.
New legislation a start for Biden’s tax visions
The Manchin-Schumer bill is not as good of a stop gap measure when compared to last year’s proposal by Biden and some Democrats which involved several trillions, but it still serves its purpose for Biden administration officials who can now move forward with plans relating to this matter.
“This is the action the American people have been waiting for,” Biden said, urging lawmakers to pass the proposed bill. “This addresses the problems of today — high health care costs and overall inflation — as well as investments in our energy security for the future.”
The Manchin-Schumer initiative has the potential to be a positive boost for Biden’s agenda ahead of November 8th. If it gains support from Senate, this could mean good news on his quest towards keeping Democrats in power.
Vice President Joe Biden has been working hard to boost the semiconductor manufacturing industry in America. This is one of his primary goals for this administration, and it’s occurring during times where he himself has low approval ratings because several Supreme Court decisions have gone against him favor more conservative values or standards.
“This bill will reduce the deficit beyond the record-setting $1.7 trillion in deficit reduction we have already achieved this year, which will help fight inflation as well,” Biden said in a statement.
“And we will pay for all of this by requiring big corporations to pay their fair share of taxes, with no tax increases at all for families making under $400,000 a year,” he added.