It’s fair to say Joe Biden’s electability has been discussed more than his policies. The former vice president is defined by what he is not – radical or revolutionary – and is seen by many Democrats as the candidate best suited to challenge President Trump in today’s deeply polarized political landscape. He picked up high profile endorsements as soon as he announced he was running for the third time in his career and won the Democratic nomination after Vermont Senator Bernie Sanders suspended his campaign on April 8, 2020.
Deborah D’Souza, an American Investment analyst argued that Joe Biden’s economic agenda is not as detailed as others and does not contain similar sweeping proposals, but his plan for the United States is still ambitious and represents more than a reassuring reset button for Americans rattled by President Trump. He has also shown signs that he’s willing to pivot to the left to win over Sanders supporters. He proposed two new policies to “ease the economic burden on working people” a day after the democratic socialist dropped out of the race.
President Donald Trump loves to thunder that Joe Biden, the Democrats Presidential nominee, is a “socialist,” a puppet of the “radical left.” But, according to Deborah D’Souza, Joe Biden’s tax proposals are generally moderate and pragmatic. Capitalism will remain alive and well, if Joe Biden becomes President, and his spending plans could invigorate the United States economy.
Ryan O’Connell, American lawyer, banker and bond analyst stated that they won’t be installing a statue of Karl Marx in a Biden White House. Joe Biden would use the additional tax revenues to fund crucial, long overdue investments in infrastructure, education and housing. Some measures could benefit the United States economy on a long-term basis, while others tackle important social issues. President Trump’s tax cuts pumped up the stock market for a year. But despite a lot of hype, they did nothing to increase capital investment or stimulate the real economy. Instead, the cuts blew a hole in the government’s finances. They are the main reason the annual deficit jumped 80% to $1.1 trillion on President Trump’s watch and that’s before the impact of COVID 19.
Joe Biden announced that he would not change personal income tax rates for Americans who earn less than $400,000. Their taxes might rise slightly because of indirect effects related to his proposed increase in the corporate tax rate. Still, that means only the top 1.5% of Americans would notice much of a change. The top 1%, those with incomes above $700,000, might see their effective tax rate increase about 4 points, to roughly 38%.
So their after-tax income might decline by 8.5%. That’s based on projections from the Penn Wharton Budget Model group at the University of Pennsylvania, which takes a non-partisan approach in evaluating such proposals. The top 0.1% of Americans would take a major hit. They would bear over 50% of Biden’s tax increases, and their after-tax income might drop 18%, according to Penn Wharton. But it’s a pretty exclusive club: you have to have an income of over $3 million a year.
That’s the same group, of course, which received a huge windfall from President Trump’s tax cuts. Joe Biden would essentially reverse those, and he would also increase the tax rate on capital gains. The effective tax rate for the top 0.1%’s of Americans could jump from 34.6% to 43% in the first year of Biden’s tax program, Penn Wharton estimates. Many members of the top 0.1%, aside from high-minded types like Warren Buffett and Bill Gates, may decide to vote for their pocketbook and support Trump. But they should realize that the 2017 tax cuts were fiscally irresponsible and not sustainable. The ultra-rich should also think hard about the benefits of living in a democracy and under a competent government, rather than being ruled by corrupt, bumbling autocrats. Some things in life are priceless.
Jeff Faux, Distinguished Fellow of the Economic Policy Institute stated that Joe Biden would increase corporate tax rates to 28%, up from 21%. That change would crimp companies’ profits somewhat, but bear in mind that the federal corporate tax rate was 35% before President Trump’s tax cuts. That was too high relative to tax regimes in other countries. But a 28% levy is a reasonable compromise that would allow United States firms to remain competitive on a global level. This change would be Biden’s largest single tax increase, and it would help to trim the government’s structural budget gap.
Jeff Faux further noted that private equity firms would pay regular tax rates on profits on their investments, rather than the ridiculously low 20% based on the so-called “carried interest” loophole. Real estate investors would incur taxes when they sold properties. Under current law, they can defer taxes by exchanging “like” properties…repeatedly. One can understand why Donald Trump might consider that last proposal “socialist”. The President has bragged that he has not paid taxes for many years.
Ryan O’Connell stressed that Joe Biden has proposed several tax increases for individuals with incomes over $400,000: restoring the top tax rate on ordinary income above that amount, from 37% to 39.6% (the rate before the Trump tax cuts); applying the Social Security payroll tax on income above that amount; and limiting tax deductions to 28% of their value. But Americans living in high-tax (and Democratic) states like New York or California might get some offset to these increases. Joe Biden has not talked about removing the $10,000 cap on deductions for state and local taxes, which the Trump tax code revisions imposed for the first time ever, in a punitive move aimed at Blue states.
In another sharp contrast with some progressives, Joe Biden’s aim is not to impose higher taxes to punish the rich or redistribute wealth, Biden would use the money to fund most of the costs for new spending programs. Unlike President Trump, Joe Biden’s plans would not cause a massive spike in the deficit. Some investments could improve the United States economy’s relative competitiveness, and others would address important social problems. Joe Biden has proposed to invest in four key areas over the next 10 years: education-$1.9 trillion; infrastructure and research and development-$1.6 trillion; housing-$650 billion; and healthcare, a net $352 billion
Biden’s education program includes universal pre-K, two years of free college for all students, and free public college for low-income students. The former Vice President would invest in water infrastructure, high-speed rail, green infrastructure and clean-energy projects, as well as artificial intelligence. The overarching goals would be a better-educated workforce and an economy more equipped to compete with China and other nations. The infrastructure and energy projects should generate a lot of jobs, too.
The former Vice President’s programs would also seek to alleviate severe shortages in public and affordable housing. As for health care, Biden won the Democratic Primary partly because he refused to back Bernie Sanders’ sweeping Medicare for All proposal. Joe Biden prefers to follow an incremental approach, which is based on expanding the reach of the Affordable Care Act and has a much lower price tag. Joe Biden would reduce the cost of medical insurance under the Affordable Care Act and lower the Medicare eligibility age from 65 to 60 years. To paraphrase Joe Biden, “Do these proposals look like radical socialism to you?”