In 2016, Democratic presidential candidate Hillary Clinton addressed such fears by proposing preferential rates for assets held for longer periods. That would be complex and raise less money, but would shield venture investment in places like Pennsylvania, a biotech and life sciences hub. Nonetheless, Congress should “seriously consider” Biden’s plan, Casey said in a statement, adding: “It’s far past time to make sure our tax code works for everyone, and not just those at the top.”
Other top Democrats, including Pelosi, a friend to Silicon Valley, and House Ways and Means Chairman Richard E. Neal of Massachusetts didn’t jump to defend Biden’s investment tax plan. Their aides instead voiced general support for a more progressive tax code. Other Finance panel Democrats we contacted either didn’t respond or didn’t have a position.
Biden has more arrows in his tax increase quiver, mainly hitting households earning more than $400,000 annually and big corporations. But his nearly $1 trillion in payroll tax increases wouldn’t fly under budget reconciliation since that would affect Social Security, said Bill Dauster, a longtime Senate Democratic aide.
Biden would raise the corporate tax rate from 21 percent to 28 percent. Combined with investment tax increases, federal taxes taken out of each dollar of corporate income for millionaire shareholders would go from 39.8 cents to 60.1 cents. But as former Obama Treasury official David Kamin points out, about three-quarters of shareholders in U.S. equities aren’t taxed, since they’re foreigners or other tax-exempt investors like pensions and retirement accounts.
The American Enterprise Institute’s Kyle Pomerleau estimates Biden’s plans would raise the effective tax rate on business investment by nearly 5 percentage points. Thus, the tax advantage the U.S. has enjoyed over Canada, for instance, since the 2017 tax overhaul could be lost. But he said the impact on saving and investment is unlikely to be large, in part because such a small slice is taxable and foreigners would likely move in to fill any void.
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June 29, 2020 at 09:31PM
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What full Democratic control of Washington could mean in 2021 - Roll Call
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