The tax increases would likely include raising the corporate tax rate from the current rate of 21% and higher levies on investment income, as well as a higher top marginal tax rate for top-earners, The Washington Post reported on Monday, citing two people familiar with the matter.
White House officials are currently drafting a multipart proposal that will serve as the basis of Biden's “Build Back Better” plan, a wide-ranging infrastructure and jobs measure that would include policies to combat climate change, as well as ways to revitalize the manufacturing industry and revamp housing, education and health care.
The measure could cost upward of $3 trillion, according to The Wall Street Journal. The White House is expected to break up the legislative effort into two main components: One focused primarily on infrastructure and clean energy investments, and a second centered on issues like child care and universal pre-kindergarten.
The tax hikes are expected to be similarly divided; the infrastructure part of the bill would be funded by taxing corporations, including raising the corporate tax rate to 28%, increasing the global minimum tax paid from about 13% to 21%, ending federal subsidies for fossil fuel companies and forcing multinational companies to pay the U.S. tax rate rather than the lower rates offered by foreign subsidiaries, according to the Post.
The second part of the legislation focused on domestic priorities, meanwhile, would be paid for by increasing the highest income tax rate from 37% to 39.6%, raising taxes on wealthy investors and limiting deductions that rich taxpayers can claim annually, the Post reported.
The proposals largely mirror what Biden proposed as a candidate during the 2020 presidential campaign.
White House press secretary Jen Psaki said Biden is considering a "range of potential options how to invest in working families and reform our tax code so it rewards work, not wealth." She stressed that conversations are "ongoing" and called speculation about future legislation "premature."
The president has repeatedly said his tax increases will not affect Americans earning less than $400,000 per year.
But the tax proposals are almost certain to spur criticism from Republicans, as well as some moderate Democrats who are wary of raising tax rates while the economy is still recovering from the coronavirus pandemic.
Senate Minority Leader Mitch McConnell, R-Ky., said last week that there will not be bipartisan support for such a move, and the Chamber of Commerce has warned that raising the corporate tax rate would "make the United States a less attractive place to invest profits and locate corporate headquarters."
An analysis of Biden's tax plan conducted by the Tax Policy Center estimated it would raise $2.1 trillion in new revenue over a decade.
In the span of one year, Congress approved about $6 trillion in relief measures, pushing the deficit to a record $3.1 trillion in fiscal year 2020 — which doesn't include the $900 billion relief package lawmakers approved in December or the $1.9 trillion American Rescue Plan passed in March. The national debt is poised to hit $30 trillion by the end of the year.