Photo Credit: REUTERS/Elizabeth Frantz
In an effort to combat income inequality and fund programs for the poor, United States president Joe Biden has proposed a new tax on corporations as well large investors. The move was met with strong support from lawmakers who believe it will help reduce economic inequality that many Americans see negatively affecting their lives today. A bill sponsored by Senators Chuck Schumer and Joe Manchin is now on docket for reading and approval.
Biden was able to get support from one crucial West Virginian Democrat, Joe Manchin, who reversed his decision on the issue. This strategic move has rejuvenated hopes for progress on taxes after being rejected time and again by Congress when Biden and a group of Democrats tried to pass the law years ago.
Since the 1940s, taxes from companies have accounted for a small percentage of the total tax revenue of the US.
Under the bill, big corporations earning around $1 billion per annum will be charged with a minimum tax rate of 15%. If the law passes, the projected tax collection will be about $313 billion within just 10 years.
Joe Biden has been a vocal advocate for higher taxes on corporations and businesses, especially when it comes to paying their “fair share.”
As it turns out, companies are paying less than the corporate tax rates imposed upon them, found the research groups in the Institute on Taxation and Economic Policy. In fact, some large corporations do not pay federal taxes at all. The condition got even advantageous for the corporations when former President Trump tried and succeeded in reducing the country’s corporate tax rate from 35% down to 21%.
When Biden took over the presidency, he set his eyes on increasing the corporate tax rate. When he lobbied for an increase of 28% last year, Congress blocked his proposition.
Senate Majority Leader Chuck Schumer said the bill would be voted this week and hopefully, Congress will also discuss matters such as “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.”
According to Senator Manchin, the other sponsor of the bill, “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.”
The Democrats have proposed increasing taxes on the wealthy, but it’s in stark contrast to the current bill being docketed, clarified Senator Manchin. The bill is called the Inflation Reduction Act of 2022.
A good start for Biden’s tax plans
The Biden Administration has been given a change to take a step in its tax plans with this new bill. It’s not the same as the Democrats envisioned, but at least it will allow them to gain some momentum for future talks in relation to the matter.
“This is the action the American people have been waiting for,” Biden said to lawmakers. “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 will give Democrats extended power over Congress.
Biden has been working hard to boost the semiconductor industry in America and passed a bill that will help with this goal. The rise of conservative Supreme Court decisions is one reason why his approval ratings are low.
In a statement, the president said, “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.”
“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,” Biden added.
Opinions expressed by Texas Today contributors are their own.