…To fund education, childcare
President Biden will seek new taxes on the rich, including a near doubling of the capital gains tax for people earning more than $1 million a year, to pay for the next phase in his $4 trillion plan to reshape the American economy.
Biden will also propose raising the top marginal income tax rate to 39.6 percent from 37 percent, the level it was cut to by former President Donald J. Trump’s tax overhaul in 2017. The proposals are in line with Biden’s campaign promises to raise taxes on the wealthy but not on households earning less than $400,000.
The president will lay out the full proposal, which he calls the American Family Plan, next week. It will include about $1.5 trillion in new spending and tax credits meant to fight poverty, reduce child care costs for families, make prekindergarten and community college free to all, and establish a national paid leave program, according to people familiar with the proposal. It is not yet final and could change before next week.
The plan will not include an up to $700 billion effort to expand health coverage or reduce government spending on prescription drugs. Officials have decided to instead pursue health care as a separate initiative, a move that sidesteps a fight among liberals on Capitol Hill but that risks upsetting some progressive groups.
News of the tax provisions appeared to unnerve investors on Thursday, with stock markets giving up gains as investors absorbed details of Biden’s capital gains tax plans. The S&P 500 closed down 0.92 percent.
The plan will set up a clash with Republicans and test how far Democrats in Congress want to go to rebalance an economy that has disproportionately benefited high-income Americans.
Biden’s advisers are eyeing a wide range of possibilities for how to move the president’s economic agenda through Congress. They are holding out hope of reaching bipartisan agreement on at least some provisions, while preparing to bypass a Republican filibuster and pass much of the tax and spending agenda on a party-line vote using the parliamentary process known as budget reconciliation.
The president has broken his economic plan into two parts. The first centers on physical infrastructure, like bridges and airports, along with other provisions such as home care for older and disabled Americans. The second part, details of which emerged on Thursday, focuses on what administration officials call “human infrastructure” — helping Americans gain skills and the flexibility to contribute more at work.
The challenges for Biden are apparent. The administration has already disappointed key Democrats, including Speaker Nancy Pelosi of California. “Lowering health costs and prescription drug prices will be a top priority for House Democrats to be included” in the plan, she said.
