Washington – President Joe Biden intends to propose a minimum 20% tax on households worth more than $ 100 million and reduce projected budget deficits by more than $ 1 trillion over the next decade, according to a sheet informative published on Saturday by the budget office of the White House.
The introduction of the minimum tax on the richest Americans would represent a major reorientation of the tax code. It would apply to the top 0.01% of households with half the expected income from households worth $ 1 billion or more. The minimum tax would effectively prevent the richest part of America from paying lower rates than middle-class families, while helping to generate income to feed Mr. Biden’s domestic ambitions and keep the deficit under control. with the American economy.
In its proposal scheduled for Monday, lower deficits also reflect the resurgence of the economy as the U.S. emerges from the pandemic. It is a sign that the government’s balance sheet will improve after a historic outbreak of spending to fight coronavirus.
The fading of the pandemic and growth has allowed the deficit to fall from $ 3.1 trillion in fiscal year 2020 to $ 2.8 trillion last year and to $ 1.4 trillion projected this year. This deficit spending paid off in the form of an expansion of the economy at a rate of 5.7% last year, the strongest growth since 1984. But inflation in a maximum of 40 years also went accompany these robust gains, as high prices have weighed on Biden’s popularity.
For the Biden administration, the proposal for the budget year, which begins on October 1, shows that the outbreak of spending helped boost growth and put government finances in a more stable position. over the next few years. A White House official, insisting on anonymity because the budget has not yet been released, said the proposal shows that Democrats can deliver on what Republicans have promised before without much success: faster growth and deficits in fall.
However, Biden’s budget would promise to do so through a kind of wealth tax that many Republicans say would hurt the economy by reducing private investment in jobs that create jobs and make the rich put his fortune abroad.
Republican lawmakers have said the Biden administration’s spending over the past year has caused more economic pain in the form of higher prices. Inflation that led to the reopening of the US economy as pandemic closures began to wane has been amplified by supply chain problems, low interest rates and, now, disruptions in the oil and natural gas markets due to the invasion of Ukraine by Russia.
Senate Republican Leader Mitch McConnell of Kentucky blames Mr. Biden’s coronavirus relief as well as his drive to move away from fossil fuels.
“The Washington Democrats’ response to these difficulties has been as wrong as the war on American energy and the rampant spending that helped create them,” McConnell said last week. “The Biden administration seems willing to try anything other than backtracking on its own disastrous economic policies.”
Mr. Biden inherited from the Trump administration a budget deficit equal to 14.9% of the entire U.S. economy. But the deficit from next budget year will be below 5% of the economy, putting the country on a more sustainable path, according to people familiar with the budget proposal who insisted on anonymity to discuss the next details.
Lower deficit totals will also be easier to manage even if interest rates rise.
The projected reduction in the deficit for fiscal year 2022 reflects the strong recovery in recruitment that was largely due to Mr Biden’s $ 1.9 trillion coronavirus relief package. The added jobs mean additional tax revenue, with the government likely raising $ 300 billion more in revenue compared to fiscal year 2021, a 10% increase.
However, the country will face several uncertainties that could reshape the president’s budget proposal, which will have figures that will not include the recently signed spending bus as a law. Mr Biden and US allies are also offering help to Ukrainians fighting Russian forces, a war that could possibly reshape spending priorities and broader economic prospects.
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