Biden’s overhauled tax plan sparks worries from industry expert: ‘A total disaster’

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Tax experts are worried about the president’s massive social spending plan Biden stressed Thursday, urging the White House to release further details on the nearly $ 2 trillion package and the tax increases on the wealthy and affluent corporations that will fund it.

The framework Biden unveiled costs around $ 1.75 trillion ($ 1,750,000,000,000), which includes funding for universal preschool, a one-year extension of the child tax credit, a modified Medicaid extension and clean energy tax credits, among others. It is based on a 15% minimum corporate tax, surtaxes on the top US households, stricter tax enforcement, taxes on corporate share buybacks, and higher taxes on foreign corporate profits. American.

The White House has estimated that the proposed tax hikes could generate around $ 2 trillion in new revenue over the next year, although analysts at Penn Wharton have found the figure to be actually closer to 1 500 billion dollars.

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“This plan certainly appears to be a complete and utter disaster for taxpayers,” Brandon Arnold, executive vice president of the National Taxpayers Union, told FOX Business. “But it’s an incomplete plan with few details. Biden needs to finish his homework and answer a few tough questions before he leaves for Europe.”

As part of the framework rolled out Thursday, Biden proposed a temporary one-year extension of the expanded child tax credit, which provides families with up to $ 3,600 per child. The White House estimated that the temporary expansion would cost around $ 100 billion a year, but Harold noted that Democrats and the President have pushed for a permanently expanded child tax credit, which would actually cost around $ 1.6 trillion.

Treasury Secretary Janet Yellen listens to President Biden in a hybrid meeting with business leaders and members of his cabinet to discuss the impending federal debt limit in the South Court auditorium in the executive office of Eisenhower B (Photo by Chip Somodevilla / Getty Images / Getty Images)

“It’s a budget gadget,” Arnold said. “So Biden has to explain whether he intends to end this credit after a year, raise taxes by an additional $ 1.5 trillion, or borrow this money from future generations.”

In fact, the bulk of the bill’s programs and spending initiatives are on the verge of being phased out in just a few short years (and in some cases – like the expanded child tax credit – even sooner than that). But lawmakers often pass multi-year extensions, even if the Congressional Budget Office – when noting the legislation – assumes those measures will expire.

Democrats have made it clear that by taking an approach of blanket cuts to the spending package, they intend to force a future Congress to extend popular programs in a few years (whether or not they are able to do so. ultimately depends on mid-term 2022).

It is not uncommon for lawmakers to take this approach: for example, in 2017, Republicans passed the Tax Cuts and Jobs Act that included several income tax provisions that were due to expire. in a few years – but lawmakers indicated at the time that they had no intention of letting that happen.

“This budget gadget, which would hide the true cost of the legislation and put program beneficiaries at risk, was rightly criticized in 2017 when it was used for some of the tax cuts in 2017,” the Non-partisan Committee for a Responsible Federal Budget in a press release. declaration. “It would be reckless and irresponsible to use arbitrary expirations and temporizations to mask the true cost of this legislation.”

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Arnold also noted that the bill leaves out some key details: for example, Team Biden predicted it could raise up to $ 400 billion by cracking down on tax fraud and giving the IRS more. funds to hire more enforcement officers, upgrade outdated technology and invest in taxpayers. services.

But the proposal doesn’t include any specific funding measures, and it’s unclear how much Democrats intend to allocate to the IRS. Biden had previously requested around $ 80 billion.

Finally, it is not clear whether Democrats have reached agreement on repealing a Trump-era limit on state and local. tax deductions. Although many centrist Democrats in high-tax states such as New York, New Jersey, and California have demanded that Biden’s proposal include a complete repeal of the $ 10,000 SALT deduction cap, Biden’s proposal does not did not include such a measure.

IRS

A man walks into the Internal Revenue Service (IRS) building in Washington, DC on Friday, May 7, 2010. Americans in search of reward money turn to neighbors, customers and employers they suspect of cheating on IRS taxes at a rate of nearly eight (Andrew Harrer / Bloomberg / Getty Images)

Households earning at least seven digits a year would reap the majority of the benefits of a full SALT repeal, according to an analysis conducted by the Tax Policy Center. About 25% of the profits would go to the richest 0.1% of US households, who would see an average tax cut of $ 145,000, while 57% would go to the richest 1%, who would see an average cut. of $ 33,100.

“Biden should answer serious and important questions” about the proposal, Arnold said.

Fox News’ Andrew Murray contributed to this report


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