Funding for America’s biggest social reform in nearly 90 years is now – if only on paper for now. As can be seen from parliamentary documents, Democrats in the House of Representatives are planning a whole package of tax increases and spending cuts, which are expected to bring in a total of $ 3.5 trillion (three trillion dollars). ‘euros) of additional income in the treasury over ten years. . This is exactly how much President Joe Biden intends to spend over the same period on better health care for citizens, support for families and tenants, and climate protection measures. In order to pass the plans through Congress, democratic leaders will have to strive to include dissidents in their own ranks. In any case, she cannot hope for help from the opposition Republicans.
According to the concept, the highest paid workers and companies must prepare for tax increases of more than a trillion dollars each. More efficient tax collection and the fight against fraud should bring in 120 billion dollars, the government of the pharmaceutical industry wants to take care of 700 billion more. Companies are expected to lower the prices of the drugs they charge for Medicare, the state health insurance for retirees and people with disabilities. Biden and his party want to recoup the remaining sum of around $ 600 million through more economic growth and higher tax revenues – a risky bet, as many experts doubt that a tax hike program will actually boost the economy.
More specifically, the economy must adapt to the fact that the income tax of large companies will drop from 21% to 26.5% today. At the same time, companies in the future are expected to tax their overseas-generated profits at at least 16.6 percent instead of the previous 10.5 percent. It is the first time that Democrats have taken advantage of the compromise to introduce a global minimum tax for companies on which the major industrialized countries had recently agreed. However, Biden initially wanted to increase the minimum tax rate to 21%.
The rich should always pay extra income tax
According to plans, the top tax rate is expected to drop from 37 percent to 39.6 percent, affecting citizens and married couples with taxable incomes over $ 400,000 and $ 450,000, respectively. In the future, a sort of empire surtax of three percentage points will be payable on income above $ 5 million. Democrats want to increase capital gains and dividends by 25% instead of 20%. Biden couldn’t win with the plan to close a tax loophole popular with the wealthy. This means that parents can continue to bequeath titles to their children without having to pay tax on the capital gain resulting from the acquisition of the paper until the testator’s death. Conversely, Democrats want to remove inheritance tax exemptions.
Behind the fiscal plans, there is on the one hand a political will, but at the same time the need not to let slip the huge national debt after the corona and the economic stimulus programs of the last 18 months. The background is that Democratic economists are also warning against a further increase in the rate of inflation by increasing public spending.
Social reform should significantly relieve families, retirees and tenants
With the expected additional income, Biden wants to fund some kind of parental leave, permanent family allowances and the continued payment of wages in the event of illness. In addition, the legislative package aims to limit the increase in rental costs and to massively reduce CO2 emissions in the USA. Fees for attending state kindergartens and community colleges are to be largely eliminated, and retirees and people with disabilities will be reimbursed for expenses related to glasses and dentures in the future.
Because the plan in the Senate is unlikely to be approved by a single Republican member and Democrats have no chance of getting the 60 votes that are actually needed, they are using a trick: They want to use a budget procedure. special to hoist the package on parliamentary obstacles, the majority of which requires only 51 votes. This is exactly the same as the number of Democratic senators if you count Vice President Kamala Harris’s decisive vote at a dead end. At least two senators have, however, already said that the planned additional spending is clearly too high. Even in the House of Representatives, Democrats cannot afford more than three dissidents.