President Biden is billing his sprawling $1.8 trillion spending proposal as a once-in-a-generation opportunity to bolster the U.S. economy, but a new analysis published this week shows that it could slash growth in the long term due to a slew of tax hikes.
The newest initiative, dubbed the American Families Plan, would dramatically expand the government-funded social safety net by establishing universal pre-kindergarten and free community college, as well as providing a slew of new tax credits for low- and middle-income families.
BIDEN OFFERS TO DROP CORPORATE TAX HIKE DURING INFRASTRUCTURE NEGOTIATIONS WITH REPUBLICANS
It would be paid for by nearly doubling the capital gains tax rate from 20% to 39.6%, raising the top individual income rate to 39.6% and closing a loophole known as the “stepped-up” basis that reduces tax on inherited wealth. But the tax changes included in the families proposal would actually slash GDP, the broadest measure of goods and services produced in the nation, by 0.4% in the long run, according to new findings from the Tax Foundation, a non-partisan group.
The proposal would generate about $661 billion in new revenue over the next decade – but that would be offset by the proposed $998 billion in expanded tax credits, according to the Tax Foundation.