Biden's Agenda

June 30, 2021  |  

93 NATIONAL ORGANIZATIONS SUPPORT PRESIDENT BIDEN’S TAX PLAN

Dear Member of Congress:

President Biden’s Build Back Better proposals provide Congress a historic opportunity to move toward an economy that works for all of us, not just the wealthy and corporations. It includes long-overdue investments that will create good-paying jobs, rebuild communities and expand opportunities for working families that will reduce inequality. Importantly, the president’s fiscal plans will fulfill his general goal to use the government to achieve greater racial equity. Federal tax and spending policies have historically contributed to the troubling income and wealth gaps between Black and white Americans; Biden’s proposed reforms will reverse many of those policies.

At the heart of Biden’s plans are big and bold public investments financed by requiring the rich and corporations to pay their fair share of taxes. The president’s economic plan—consisting of the American Jobs Plan, Americans Families Plan and Made in America Tax Plan—will finance $4.2 trillion in new investments with $3.8 trillion in revenues from the wealthy and corporations over 10 years. Those investments will rebuild roads, bridges, and other infrastructure; expand the use of clean energy; strengthen American manufacturing and small businesses; make healthcare premiums and housing more affordable; increase investment in public education, childcare, and home- and community-based supports for the elderly ​and people with disabilities; guarantee workers up to 12 weeks of annual paid family and medical leave; and help rebuild the middle class. 

The 93 undersigned organizations write to demonstrate our support for the president’s plan to reshape the economy through tax fairness policies that support investments to increase financial security, opportunity, and equity. President Biden’s proposals offer a bold step forward that will put the United States on a trajectory toward a much brighter future for workers, families, and small businesses.

Biden’s tax reforms, which will not raise taxes on anyone earning less than $400,000 a year, are widely popular. In 12 recent polls, voters support the president’s tax proposals by 60% to 65% or more, including independent voters. Here are our views about individual components of the Biden tax plan.

CURB CORPORATE TAX DODGING & OFFSHORING

American corporate profits have set records in recent years. Meanwhile, in 2020 55 of the nation’s biggest corporations (including FedEx, Nike and Salesforce.com) made $40.5 billion in total profits but paid nothing in federal income taxes. A government survey of over 1,500 U.S.-based multinational firms found that for 2018, they paid an average U.S. tax rate of just 7.8%—far below the median 14% tax rate paid by all households. American corporations dodge an estimated $60 billion a year in U.S. taxes by shifting profits and production offshore because the federal income tax rate on their foreign profits is about half the domestic tax rate. President Biden has three major proposals to address this tax avoidance and require corporations to begin to pay their fair share:

  • Raise the corporate tax rate to at least 28%—a 25% rate is NOT high enough. The Trump tax law cut the corporate tax rate from 35% to 21%. Biden’s proposal to raise it back to 28% will raise nearly $900 billion, $300 billion more than the 25% rate the business community asked for in 2017, enabling us to better invest in our families and communities. 
  • Curb offshore corporate tax dodging: The tax code encourages corporations to outsource jobs and shift profits to tax havens because it taxes the foreign profits of U.S. firms at about half the domestic rate. Biden’s proposed reforms will take a big step to curb offshoring, raising more than $1 trillion, by doubling the tax rate on offshore profits from an effective 10.5% to 21% and implementing reforms to stop erosion of the corporate tax base and the shifting of intellectual property offshore. 
  • Establish a 15% minimum corporate tax: Biden will ensure that large profitable corporations cannot get away with paying zero in federal income taxes by implementing a 15% minimum tax on the profits they report to shareholders, raising $150 billion.

ENSURE THE WEALTHY PAY THEIR FAIR SHARE

America’s wealthiest 1% got $4 trillion richer last year, capturing 35% of the extra wealth generated nationwide while the poorest half of the population got just 4%. The nation’s 650 billionaires saw their collective fortunes increase by 55%, or $1.6 trillion, during the first 13 months of the pandemic. That is enough to pay for nearly two-fifths (38%) of the $4.2 trillion cost of Biden’s investment plans.   

Billionaires and millionaires living off their wealth can pay a lower tax rate than middle-class workers like teachers, nurses and truck drivers pay on their wages. The richest 1% are responsible for more than one-third of total tax evasion, costing the $175 billion per year. President Biden has proposed three principal reforms to tax the wealthy more fairly:

  • Tax wealth like work: For people earning more than $1 million a year (the richest 0.3% of taxpayers), Biden will close the loophole that lets them pay a tax rate on the sale of stock and other assets that is far lower (20%) than the top rate workers pay on wages (37%). Biden also will close a loophole that lets millionaires dodge taxes altogether on a lifetime of unrealized capital gains—income and increased wealth that the rich get from stocks and assets. These reforms will raise $325 billion.
  • Restore the top individual tax rate and stop avoidance of healthcare taxes: To better ensure CEOs and other high-paid employees pay more fair taxes, Biden wants to restore the top individual rate to 39.6%, its rate before the Trump tax cuts. No one earning less than $453,000 a year will pay more tax. Biden will also close loopholes that result in wealthy business owners avoiding taxes that fund the Affordable Care Act. These two reforms will together raise $370 billion
  • Crack down on tax evasion by the wealthy: Biden wants to reverse years of deep cuts to the IRS that resulted in much weaker tax enforcement of the wealthy and corporations. He will invest $80 billion to strengthen IRS enforcement and information technology and increase reporting of income to catch wealthy tax cheats. Such reforms will net $700 billion in revenue.  

These reforms affecting the wealthy are a great start—altogether they will raise $1.5 trillion over 10 years from the rich. However, that is just shy of the $1.6 trillion increase in wealth enjoyed by 650 U.S. billionaires since the pandemic began. After years of tax breaks and gaming the system, Congress should require the wealthy to do much more, and raise more revenues for our shared priorities. Options include rolling back other Trump tax cuts and enacting laws that also:

  • Cap the value of itemized deductions at 28%: Higher-rate taxpayers benefit more from deductions than those paying lower rates. (A $1,000 deduction saves a taxpayer in the 35% tax bracket $350, but only $240 for one in the 24% bracket.) Capping the value of deductions at 28% for married couples with income over $400,000 would raise about $225 billion while making the system fairer. 
  • Restore the estate tax to 2009 levels and close dynasty trust and other loopholes. Estates worth up to $11.7 million today for a single person ($23.4 million per couple) are exempt from estate taxes. Congress should restore the 2009 exemption levels and rates, which would tax family fortunes above $3.5 million and $7 million, respectively. That would raise about $220 billion while taxing only about the six wealthiest of every 1,000 estates, or 0.6% of estates.
  • End the 20% deduction for owners of pass-through businesses earning more than $400,000. Pass-through businesses—sole proprietorships, partnerships and S corporations—do not pay corporate taxes, their owners pay taxes at individual rates. The Trump tax law created a loophole letting them deduct 20% of their income when calculating their taxes. Because pass-through income is so concentrated at the top, within a few years over 60% of the benefit of this deduction will flow to the wealthiest 1% of business owners. This loophole is scheduled to close in 2026; ending it this year could raise about $140 billion and eliminate the risk that it will be extended beyond 2025. 
  • Establish a wealth tax of just 2% on households worth over $50 million or 3% on billionaires. This could raise an estimated $3 trillion and narrow the nation’s destabilizing wealth gap. 
  • Enact a financial transaction tax (or Wall Street Sales tax) of as little as 10 cents on every $100 worth of trades in stock and other securities. This could raise some $750 billion while calming risky and harmful speculation that is costly to small investors. 

Now is the time to unrig the tax system and rebuild our economy so that everyone has a meaningful chance to prosper, care for their families and secure the future for coming generations. Congress should take the first step now to pass President Biden’s tax proposals and even add to them to ensure the economy works for all of us, not just the wealthy and corporations. 

Sincerely,

List in formation

ACA Signups
AFL-CIO
Alliance for Retired Americans
American Family Voices
American Federation of Government Employees
American Federation of State, County and Municipal Employees (AFSCME)
American Federation of Teachers
Americans for Democratic Action (ADA)
Americans for Financial Reform
Americans for Tax Fairness
American Sustainable Business Council
Bend the Arc: Jewish Action
Blue Future
Campaign for America’s Future
Center for American Progress (CAP)
Center for Law and Social Policy (CLASP)
Center for LGBTQ Economic Advancement & Research (CLEAR)
Center for New Revenue
Center for Popular Democracy
Coalition of Labor Union Women
Coalition on Human Needs
Communications Workers of America (CWA)
Community Change Action
Congregation of Our Lady of Charity of the Good Shepherd, U.S. Provinces
Daily Kos
Democracy for America
Demos
Economic Policy Institute
Economic Security Project Action
Faith in Public Life Action Fund
First Focus Campaign for Children
Friends Committee on National Legislation
Groundwork Action
Health Care for America Now
Hedge Clippers
Herd on the Hill
ICNA Council for Social Justice
In Our Own Voice: National Black Women’s Reproductive Justice Agenda
Indivisible
Institute for Policy Studies – Inequality Program
Institute on Taxation and Economic Policy
International Association of Machinists and Aerospace Workers
International Brotherhood of Teamsters
International Federation of Professional and Technical Engineers (IFPTE)
International Union, United Automobile Aerospace and Agricultural Workers of America (UAW)
Jobs with Justice
Just Strategy
Main Street Alliance
MomsRising
MoveOn Political Action
National Advocacy Center of the Sisters of the Good Shepherd
National Association for Hispanic Elderly
National Birth Equity Collaborative
National Center for Lesbian Rights
National Education Association
National Employment Law Project
National Latino Farmers & Ranchers Trade Association
National LGBTQ Task Force
National Organization for Women
National Rural Social Work Caucus
National Women’s Health Network
National Women’s Law Center
NETWORK Lobby for Catholic Social Justice
Our Revolution
Oxfam America
Patriotic Millionaires
People’s Action
Pride at Work
Progressive Change Campaign Committee
Progressive Democrats of America
Prosperity Now
Public Citizen
Responsible Wealth
Restaurant Opportunities Centers United
RESULTS
RootsAction.org
Service Employees International Union
Shriver Center on Poverty Law
Sierra Club
Small Business Majority
Social Security Works
Take on Wall Street
Tax Justice Network US
Tax March
UNITE HERE
The United Methodist Church – General Board of Church and Society
UnidosUS Action Fund
United for a Fair Economy
United Steelworkers
Voices for Progress
Women’s March
Working America
Working Families Party