White House: "No Tax Increase for Those Earning Less Than $400,000"... Tax Hike Controversy Intensifies

Tax Increase for the First Time in 28 Years Since 1993
Securing Funds for Additional Stimulus Measures Including the Green New Deal

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] As the Biden administration in the United States has been discussing tax increase plans immediately after the passage of the economic stimulus package, controversy is spreading in the U.S. political sphere. The so-called 'wealth tax increase,' focusing on corporate tax rates and high-income earners, is expected, but opposition voices are also rising due to concerns over the deterioration of corporate competitiveness. The additional tax revenue generated from the tax increase is expected to be invested in further economic stimulus measures such as the Biden administration's Green New Deal, raising concerns about fiscal deterioration.

According to foreign media including CNBC, on the 15th (local time), White House Press Secretary Jen Psaki said at a press briefing, in response to questions about the Biden administration's tax increase plans, "President Biden will not raise taxes on people earning less than $400,000 annually (approximately 453 million KRW) as promised," adding, "This is an issue still under discussion with Congress, and no finalized package has been decided yet." This statement is interpreted as a response to criticism following media reports that the Biden administration is pushing for tax increases.

Earlier, foreign media including Bloomberg News reported that the Biden administration is pursuing tax increases. According to Bloomberg News, the Biden administration is discussing tax increase plans including ▲raising the corporate tax rate from the current 21% to 28% ▲increasing the top individual tax rate for those earning over $400,000 from 37% to 39.6% ▲taxing capital gains as income for individuals earning over $1 million annually ▲raising the estate tax on inheritances over $1 million from 40% to 45%, as promised by President Biden during his presidential campaign.

Analyses suggest that if the tax increase plan is realized, tax revenue will increase by $2.1 trillion over the next 10 years, with some estimates reaching up to $4 trillion, Bloomberg News reported. The increased tax revenue is expected to be invested in additional economic stimulus measures such as the Green New Deal, which includes eco-friendly energy, electric vehicles, and infrastructure projects promoted by the Biden administration. The Green New Deal is expected to require about $4 trillion in funding.

However, the outlook is that congressional approval for the tax increase will not be smooth. The Republican Party strongly opposes it, citing concerns over weakening corporate competitiveness. Instead of a large-scale tax increase, the Republicans propose increasing investment in the IRS's tax collection enforcement. The Republican Party estimates that investing $1 in IRS enforcement could collect an additional $3 to $5 in taxes. Additionally, Republicans advocate for indirect tax increase methods, such as converting the fuel tax to a mileage-based fee to help with highway construction.

The Democratic Party is also expected to find it difficult to strongly push for politically burdensome tax increase plans amid the COVID-19 crisis. The U.S. political media outlet The Hill reported, "Democratic lawmakers have expressed some hesitation about supporting tax increases," adding, "Some members have called for postponing tax increases given the high unemployment rate following the pandemic," reflecting the Democratic Party's atmosphere.

This content was produced with the assistance of AI translation services.