Biden Poised to Raise Taxes on Business and the Rich

Many liberal economists say there are good reasons to collect taxes, starting with using those funds to invest in workers and help build economic opportunity. Spending on physical infrastructure like roads and water pipes, or programs like education and childcare to help people make more money, could help reduce persistent inequalities in income and wealth. Economists also say that properly put in place tax increases would incentivize multinational corporations to keep jobs in the United States and not shift profits to countries with lower taxes.

“The purpose of the tax system is to both generate enough income for what the government wants to do and to ensure that we encourage activities that are in the national interest and discourage those who do not.” said Heather Boushey, a member of the White House Council of Economic Advisers.

Key Democrats are trying to get the party to reach consensus. Leading Senate tax writer Ron Wyden of Oregon is drafting a series of tax hike bills, many of which overlap with Mr Biden’s campaign proposals.

“I will be ready to speak about what the Democratic caucus deems necessary to move forward,” said Wyden, chairman of the Senate Finance Committee, in an interview.

Mr Wyden’s plans include major changes to parts of Mr Trump’s tax cuts that revamped United States’ taxation of multinational corporations, including creating some sort of minimum tax on overseas income. Mr Wyden and many Democratic economists, including some within the Biden administration, say the tax was designed to ultimately lead companies to keep moving their profits and activities offshore to avoid American taxes. Republican economists and some tax experts disagree, saying the law allowed US companies to compete better globally.

A report by the Joint Tax Committee of Congress earlier this month showed that multinational corporations paid an average US tax rate of less than 8 percent on their income in 2018, compared with 16 percent in 2017. The report also found that these companies Their taxes did not slow down the practice of posting profits in low tax havens like Bermuda.

Mr Biden, Mr Wyden and Mr Sanders have all drawn up plans to increase revenue through an amendment to the 2017 law to force multinational corporations to pay more to the United States. One of the most lucrative ways to do this, according to tax scorekeepers, would be to increase the global minimum tax rate, forcing these companies to pay higher US tax rates regardless of where they find jobs or profits.

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