Biden decides to shelve Warren’s wealth tax

The Biden White House had not rejected the idea – at least not in public – and Treasury Secretary Janet Yellen did not immediately reject it said earlier this month The administration wasn’t sure whether to pursue it any further. This fueled optimism among supporters that eventually some form of property tax would be used to pay for democratic priorities such as infrastructure, clean energy, broadband expansion and repairs to hospitals and schools.

Supporters argue that it would be both lucrative – Some economists estimate it could make about $ 3 trillion over 10 years – and popular with Polls show Almost 7 out of 10 voters support the proposal somewhat or strongly. Indeed, the idea helped fuel Warren’s early rise in the 2020 presidential campaign as she turned it into a populist campaign theme with the masses chanting “Two cents!” at their events.

The White House is expected to turn to a number of other compensations instead, including an increase in the corporate rate, an end to federal fossil fuel subsidies, and an effort to end offshore corporate tax havens.

While Biden spoke out against Warren’s tax structuring during the campaign, he stuck to redistributive tax policy as a bigger concept. Although their plans to address the issues vary, the president shares Warren’s view that “middle-class families are paying more than their fair share and those at the top are not doing their part,” said a Biden administration official.

“We have to start rewarding work, not just wealth,” Biden said on the campaign.

In the White House, the idea that Biden would accept Warren’s approach, having clearly opposed it during the campaign, was hard to reconcile. Biden advisors also see no political risk in tossing a wealth tax aside and find that he already supports several tax increases for the rich, according to several people familiar with his thinking. For example, if you took steps to increase capital gains and estate taxes, or to raise the highest individual income tax rate, you would appeal to wealthy Americans while avoiding a fight over the property tax itself.

Biden and Warren also agree on some other measures to increase taxes on the rich, according to a Warren spokesman, including removing the widened loophole that can allow the rich to pass wealth on to heirs tax-free. Warren will continue to push the White House and finance department on their property tax proposal, the spokesman said.

“The bottom line is that Democrats seem no longer afraid of taxing the rich in significant amounts, and they are very open about us raising taxes on the rich,” said Adam Green, co-founder of the Progressive Campaign Committee for Change. “This is a fundamental change from what we were a few years ago.”

Although interest in the idea of ​​a wealth tax has been widespread, there is real concern on Capitol Hill that implementing it, as Warren has suggested, would prove unconstitutional – and that federal courts are unlikely to have Donald Trump-appointed judges In the EU, Biden decide favor with the government on this issue. A Democratic adviser said the White House is reluctant to throw its weight behind the idea if it can rely on other allowances that the majority of lawmakers are more comfortable with.

There’s also some skepticism that a wealth tax would increase the $ 3 trillion Warren talks about because it would be difficult to accurately measure Americans’ wealth each year – and how easy it could be for wealthy families, you Hiding assets. A piece of paper Last year, led by the Treasury Department’s Matthew Smith, projected a Warren-style wealth tax to raise $ 117 billion in 2016, which apparently falls far short of other estimates.

The revenue proposals that Biden has since adopted are still aimed at “eliminating or reducing this problem of” people accumulating large amounts of wealth over time that is never taxable, “said Sharon Parrott, president of the Center for Budget and Policy Priorities.

“There are many different mechanisms for doing this,” Parrott said. “The most important thing is that we actually do it.”

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