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Joe Biden has promised to make college and healthcare more affordable while steering the nation toward greener energy alternatives. However, these ambitions will come with a hefty cost—over $3 trillion. After months of scrutinizing other candidates' proposals as underdeveloped, Biden has now unveiled his own. Let's dive in and explore the details.
At first glance, it seems as though Joe Biden is aiming to recreate the spirit of his vice presidency and the Obama administration with his plan. He intends to reverse some of the tax cuts from the Tax Cuts and Jobs Act of 2017, raising taxes back to the levels seen during the Obama era. Unlike some of his rivals who advocate for Medicare for all, he isn't looking to scrap the existing healthcare system (also known as Obamacare).
Biden is positioning himself as one of the more centrist Democrats in the 2020 race. While his plan may not be as bold as Senator Warren’s or Sanders' ideas of taxing the wealthy to benefit nearly everyone else, his proposal presents a more achievable shift following President Trump’s tax cuts.
As reported by Bloomberg News, which obtained a copy of the proposal, Biden aims to generate $400 billion over the next decade from corporate tax collections alone. Altogether, his plan includes $3.4 trillion in tax hikes to fund his policies.
Biden’s budget proposal breaks down into several major categories of spending:
A strong supporter of the Affordable Care Act, which was passed during his time as vice president, Biden seeks to enhance the value of tax credits to lower upfront costs for families purchasing insurance. He also plans to cap insurance premiums for marketplace plans at 8.5% of an individual’s income. The cost of this initiative is expected to be under $1 trillion, according to The Washington Post.
On the topic of higher education, Biden proposes making two years of community college or vocational training available to all students at no cost, increasing the maximum value of federal Pell grants, and expanding income-driven repayment plans for federal student loans. The projected cost for these measures is around $750 billion.
In addition, Biden is pushing for the federal government to invest $1.7 trillion in clean energy and environmental justice initiatives.
Here’s a breakdown of how Biden would finance his proposals, according to Bloomberg’s analysis:
$800 billion: Tax capital gains as regular income for individuals earning over $1 million.
$730 billion: Increase the corporate tax rate to 28%, up from 21% after the 2017 tax cuts, which had previously reduced it from 35%.
$440 billion: Eliminate the stepped-up basis, a provision that adjusts the value of inherited assets to reduce capital gains tax liabilities.
$400 billion: Implement a 10% minimum corporate tax, targeting companies with net income over $100 million that currently pay little or no federal taxes due to tax incentives like building facilities, compensating workers with stock, or using past losses to offset profits, as reported by Bloomberg.
$340 billion: Impose a 21% tax on foreign profits, effectively doubling the current rate of 10.5% that has been in place since the 2017 tax overhaul.
$310 billion: Limit tax deductions available to the wealthy.
$200 billion: Intensify efforts to target illegal tax havens in regions such as Ireland, the Netherlands, the Cayman Islands, and Bermuda.
$90 billion: Increase the top individual income tax rate to 39.6%, restoring the rate to its previous level before President Trump’s tax cuts.
$70 billion: Close tax loopholes that currently benefit real estate investors.
$40 billion: Eliminate fossil fuel tax subsidies.
If Biden’s $3.4 trillion proposal feels relatively modest when compared to other candidates’ policy funding plans, it’s because... well, it’s not that large.
While Biden’s plan is far less ambitious than, say, Senator Elizabeth Warren’s $52 trillion proposal for Medicare for all, there are notable similarities. Both Biden and Warren seek to tax capital gains income for the wealthy and crack down on tax avoidance.
Senator Bernie Sanders’ plan to fund his Medicare for all initiative also relies on similar measures such as limiting tax deductions for the wealthy, taxing capital gains as regular income, and imposing taxes on offshore profits.
