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Ethics & Religion
Column #2,094
Sept. 30, 2021
How To Pay for Biden's Initiatives
By Mike McManus

On Sept. 24 President Biden asserted, "My Build Back Better Agenda costs zero dollars."

The President's spending package is often described in news reports as costing $3.5 trillion over 10 years. The President says this is misguided because Democrats are proposing to fund the spending with tax hikes on corporations and the wealthy.

The infrastructure bill was originally set at $1.5 trillion. But because Biden wanted to pass it on a bi-partisan basis, the bill shrunk to $550 billion in new spending over 10 years, that was passed with no tax increases, - the price of winning GOP support.

The other major bill is $3.5 trillion. On Friday President Biden unveiled $3.6 trillion in tax increases on wealthy Americans and big corporations to pay for his plans to combat climate change, reduce income inequality and expand the nation's social safety net.

Biden charged, "Over the past 40 years, the wealthy have gotten wealthier and too many corporations have lost their sense of responsibility to their workers, their communities and the country."

He then zeroed in on the tax slackers: "How is it possible that 55 of the largest corporations in the country paid zero dollars in federal income taxes? They made over $40 billion in the year 2020, and they paid zero," he charged. How is it possible that the wealthiest billionaires in the country can entirely escape paying income tax on what they have made?"

Republicans are opposed to requiring big corporations and billionaires to kick in something.

The White House hammered home its message in a written analysis: "We estimate that the 400 wealthiest families paid an average federal individual income tax rate of 8.2% on $1.8 trillion of income over the period 2010-2018." It stated, "Two factors that contribute to this low estimated tax rate include low tax rates on the capital gains and dividends that are taxed, and wealthy families' ability to permanently avoid paying tax on investment gains that are excluded from taxable income."

Under the Biden plan, they would pay a modest 26% for families making at least $1 million a year. The Administration's analysis concludes, "Preferential capital gains rates and stepped up basis - a provision of tax law that allows wealthy taxpayers to wipe out unrealized capital gains for income tax purposes when they pass assets to their heirs - contribute to this low tax rate. The 2022 President's Budget would increase capital gains rates and virtually end stepped-up basis for the highest-income Americans, thereby ensuring their investment gains are subject to income tax."

As Biden stated in his Sept. 16 speech, "For a long time, this economy has worked great for those at the very top, while ordinary, hard-working Americans - the people who built this country - have been basically cut out of the deal."

At least 55 of the largest corporations in America paid no corporate income taxes despite enjoying substantial pre-tax profits in the United States. The tax-avoiding companies enjoyed almost $40.5 billion of pretax income in 2020 according to their financial reports.

The statutory federal tax rate for corporate profits is 21%. The 55 corporations would have paid a total of $8.5 billion for their 2020 income. Instead, they received $3.5 billion in tax rebates.

Examples: Archer Daniels Midland enjoyed $438 million of pretax income last year and received a tax rebate of $164 million. FedEx earned $1.2 billion in 2020 yet received a rebate of $230 million. Nike paid not a dime on $2.9 billion of income. Instead, it enjoyed a $109 million tax rebate. Some 26 corporations reported $77 billion in pretax income over three years and received tax rebates of $4.6 billion.

Similarly, many super-rich individuals pay next to no income tax, such as Amazon founder Jeff Bezos in 2007 and 2011. Overall, the richest 25 Americans paid less in tax - an average of 15.8% of adjusted gross income - than many ordinary, workers do, once taxes for Medicare and Social Security are included.

Using perfectly legal tax strategies, many of the super rich are able to shrink their federal tax bills to nothing of close to it.

Those earning more than $5 million - 1,400 people who reported $69 million of income - paid 23% and the 25 very richest people paid less.

Biden proposes to raise the top tax rate to 39.6% for those earning $400,000 a year or more - fewer than 2% of all households. The top tax rate is now 37%.

It is high time for the rich and corporations to pay their fair share.

_________________________

Copyright (c)2021 Michael J. McManus, President of Marriage Savers and a syndicated columnist. To read past columns, go to www.ethicsandreligion.com. Hit Search for any topic.

 

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