US President Joe Biden is preparing for the first major federal tax increase in the United States since 1993, which would be needed to finance a long-term economic program following the $1.9 trillion bailout approved last week. The president's advisers are working on a solution that could include raising corporate taxes and the individual tax rate for high earners.

American President Joe Biden is preparing for the first major federal tax increase in the United States since 1993, which would be necessary to finance a long-term economic program following the $1.9 trillion bailout package approved last week, Bloomberg news agency reports citing sources familiar with the matter.

As they write, the Biden cabinet is expected to finance even greater measures than the current rescue package, not only with loans, i.e. by increasing the national debt. According to Bloomberg's sources, the president's advisers are working on a solution that could include raising corporate taxes and the individual tax rate for high earners.

According to the article, the tax increase would not only offer the opportunity to finance initiatives that are crucial for the Biden cabinet, such as infrastructure development, the fight against climate change, or helping Americans living in poorer circumstances, but also to change the inequalities of the tax system.

As they write, the tax increase plan will be a serious test from the point of view of whether the president can convince the Republicans, and it will also show how united the Democrats are.

As part of the tax hikes, the Biden cabinet is likely to repeal parts of former President Donald Trump's 2017 tax law that favor corporations and high earners, according to sources familiar with the draft who asked not to be named. In addition, as they said, other changes must be made in order to make the tax law more progressive.

Speaking about the details, Bloomberg's sources reported that the proposals include, for example, raising the corporate tax rate from 21 to 28 percent, reducing tax incentives for certain businesses, and raising the income tax rate for individuals earning more than $400,000 a year.

An independent analysis of the tax increase planned by the Biden cabinet estimated that the measures could bring the country $2.1 trillion in revenue over the course of a decade, but the Democrats would be satisfied with a $500 billion package, according to the article.

The comprehensive tax increase program has not yet been officially announced. According to the article, if passed, the new tax measures would likely take effect in 2022, although some lawmakers and Biden supporters outside the administration have argued that they should not be implemented until unemployment due to the coronavirus pandemic is high.

MTI