President Joe Biden on Wednesday will propose raising taxes on the wealthiest Americans to pay for pre-kindergarten and community college education and paid leave for healthcare. The $1.8 trillion plan involves $1 trillion in new spending and $800 billion in tax credits.
WHAT AMERICANS WOULD GET
Universal pre-kindergarten: Biden will ask Congress to provide $200 billion for free preschool for all 3- and 4-year-olds.
Childcare: The package would assure that low- and middle-income families pay no more than 7 percent of their income on childcare for children under 5 years old.
Paid family leave: It would guarantee 12 weeks of paid parental and family leave by year 10 of the program and also assure that workers receive three days of bereavement leave a year starting in the first year.
Free community college: It would seek $109 billion for two years of free community college regardless of income.
Boost Pell Grants: It would provide up to about $1,400 in additional assistance to low-income students by increasing the Pell Grant award, a popular college subsidy program.
Retain students: It would provide $62 billion via a grant program to invest in completion and retention activities at colleges and universities that serve high numbers of low-income students, particularly community colleges.
Historically Black colleges: It would seek $39 billion to help pay for two years of subsidized tuition for students from families earning less than $125,000 enrolled in a four-year college that serve primarily minority students, such as Historically Black colleges and universities.
Teachers: It would double scholarships for future teachers to $8,000 from $4,000 and provide money to help teachers, particularly those in low-income school districts, earn additional certifications.
Extended child tax credits: Biden is seeking to extend the expanded child tax credit, which is essentially a monthly payment from the government for most families, through 2025. The credit was created on a temporary basis by a $1.9 trillion coronavirus relief package passed in March.
Child and Dependant Care Tax Credit: The plan would make permanent the temporary Child and Dependent Care Tax Credit (CDCTC) expansion enacted in the COVID-19 relief bill. Families would receive a tax credit for as much as half of their spending on qualified childcare for children under age 13, up to a total of $4,000 for one child or $8,000 for two or more children.
HOW THE RICHEST AMERICANS WOULD PAY FOR IT
Top marginal tax: Biden will propose raising the top marginal income tax rate to 39.6% from 37%. For tax year 2021, the top tax rate is 37% for the richest Americans – individual taxpayers with incomes greater than $523,600 and married couples filing jointly with over $628,300.
Capital gains: Biden would nearly double taxes on capital gains, or income earned from the sale of an asset like a stock, to 39.6% for people earning more than $1 million. Households making over $1 million – the top 0.3% of all households – would pay the same 39.6% rate on all their income, equalizing the rate paid on investment returns and wages.
Inheritance: The plan would eliminate the loophole that allows the wealthiest Americans to escape tax on their wealth by passing it down to heirs. Tax laws allow those accumulated gains to be passed down across generations untaxed.
Carried interest: It would close the carried interest provision in the tax code and force hedge fund partners to pay ordinary income tax rates on their earnings.
Real estate: It would end the special real estate tax break that allows real estate investors to defer taxation when they exchange property for gains greater than $500,000.
Enforcement: It would raise revenue by increasing enforcement at the Internal Revenue Service to bring in more money from wealthy Americans and corporations that evade taxes. The Biden administration believes the move will generate $700 billion over 10 years.
(Reporting by Jarrett Renshaw; Editing by Heather Timmons and Peter Cooney)
