Biden’s Tax Plans Will Raise Taxes By $3 Trillion
The new fiscal stimulus worth almost 5 trillion dollars that advances in the Capitol as part of the budgets will have a timid impact on the United States economy, as warned from Capital Economics.
Its chief economist, Paul Ashworth, estimates that the bipartisan infrastructure deal, valued at $ 1 trillion ($ 550 billion in additional spending) that could be approved by the end of September, will not provide any significant boost to the economy over the next two years. years.
For its part, the $ 3.5 trillion spending package that Democrats intend to pass through reconciliation later this year could provide further stimulus, but given that spending will be largely offset by the tax increases its impact will be moderate.
Limit the impact
The budget resolution is the first step toward Biden’s plan to raise taxes by $ 3 trillion over the next decade. Some of these tax increases include raising the corporate tax rate from 21% to 28% and doubling the capital gains tax to 43.4%.
“We suspect that the additional spending will be largely offset by increases in corporate and high income taxes, which means that the net impact on the deficit and the economy will be much less,” Ashworth explains. He further recalls that since several moderate Democrats in the Senate have already voiced their opposition to such a substantial increase in spending, the reconciliation may not pass at all, or may only pass after downsizing.
Congress needs to pass a budget or continuity resolution before October 1 to avoid a government shutdown.