Business lobbyists and conservative think tanks are not big fans of President Biden’s proposed tax hikes on the rich.
The Tax Foundation said Biden wanted to raise capital gains tax to “levels not seen since the 1920s.” Suzanne Clark of the US Chamber of Commerce called the same plan “outrageous.” Jay Timmons of the National Manufacturers Association called the proposed corporate tax rate hike “archaic.” And Brendan Bechtel, the managing director of the construction company that bears his last name, said that “that doesn’t seem right.”
All of this rhetoric has obscured a basic fact about Biden’s tax plan: He wouldn’t actually raise the tax rates of the rich to high levels, historically speaking.
If all of Biden’s proposed tax increases were passed – on corporate income tax, as well as investment taxes and high income income taxes – the total federal tax rate for the rich would remain significantly below what it was in the 1940s, 1950s and 1970s. 60s. It would also remain a little lower than in the mid-1990s, based on an analysis Gabriel Zucman of the University of California, Berkeley did for The Morning.
This graph shows the total federal rate for the richest 0.01% of wage earners (who currently earn about $ 28 million per year on average) and the richest 1% of wage earners (who earn $ 1.4 million on average):
Rising taxes and economic boom
Data reminds How far taxes on the rich have fallen over the past 70 years. In the decades following World War II, many companies paid about half of their profits in federal taxes. (Shareholders, who are disproportionately wealthy, do pay these taxes). Today, corporate taxes represent only about a quarter of their share of GDP, as they were in the 1950s and 1960s.
The declines are not all ancient history either. For most of the past quarter century, taxes on the rich have continued to fall, including rates on corporate profits, personal income, stock dividends, stock holdings, and estates. Barack Obama reversed some of the cuts, but only some. “Over the past 25 years, federal income tax policy has had the effect of reducing the overall revenue collected from top earners,” Owen Zidar, an economist at Princeton University, told me.
Whether you like Biden’s plan or hate him, it’s not drastic. For this reason, it is highly unlikely that it will have the detrimental effects on economic growth that its critics claim. Remember: in the 1990s, the last time tax rates were as high as those proposed by Biden, the economy exploded. It also increased rapidly after World War II, when tax rates were even higher.
History suggests that tax rates on the rich are not the primary determinant of economic growth (and, where appropriate, higher taxes on the rich can sometimes spur growth). The main effect of Biden’s tax plan is unlikely to be on the level of GDP, but rather on the relative tax burden the rich pay. When they criticize the plan as unfair, archaic and outrageous, they are really saying they like paying low tax rates.
Biden said the United States would admit up to 62,500 refugees over the next six months, overturning his decision to keep a lower limit set by Donald Trump.
The EPA plans to limit a class of global warming chemicals used in air conditioning and refrigeration.
Richard Cordray, an ally of Senator Elizabeth Warren, will oversee federal student aid, putting it at the center of Democratic disagreements over debt cancellation.
Representative Liz Cheney, the third House Republican, accused Trump of “poisoning our democratic system” by making false allegations of voter fraud.
The country’s growing diversity doesn’t help Democrats as much as liberals hope, says Cohn.
Business and Media
Bill and Melinda Gates divorce, raising questions about the future of their philanthropic foundation.
Verizon will sell Yahoo and AOL to private equity firm Apollo for $ 5 billion, about half of the amount paid to buy the companies.
The pandemic disruptions have resulted in shortages – and price hikes – of lumber, cleaning products, microchips and other products.
The Los Angeles Times has announced its next editor: Kevin Merida, formerly of ESPN and The Washington Post.
Other great stories
When the World Trade Organization meets this week, should it relinquish the Covid vaccine patents increase access for the poorest countries?
Yes: Biden should support a waiver to save lives, writes Walden Bello in The Times. This would also guard against the emergence of more deadly variants, notes Michelle Goldberg.
No: Vaccines are difficult to manufacture, so waivers alone won’t raise the offer, say Rachel Silverman of the Center for Global Development and others. And companies have shown that they will work voluntarily to increase doses, writes Andrei Iancu in Stat.
“Fear and joy”: Great photos of Stromboli.
A Times classic: Can you guess if these neighborhoods voted for Biden or for Trump?
Lives lived: He was born Joseph Jacques Ahearn, but his mother thought that Jacques d’Amboise would be better suited to the world of ballet. Having become a dancer, d’Amboise found fame in New York and Hollywood. He died at the age of 86.
ARTS AND IDEAS
The incredible achievement of ‘All the Girls’
By the time the producers were set to record a new album by soprano Rebecca Luker last year, she was too sick to sing. ALS had stolen his strength.
But the producers did not give up.
They created what Tommy Krasker, the head of the Luker label, called “the first studio album made without ever entering the studio.” They used the recordings from one of Luker’s final performances – and the rehearsals for it – while the musicians recorded material at home during the lockdown. The producers mixed the sounds, “and miraculously what came out sounded perfect,” writes critic Jesse Green in The Times.
The album, “All the Girls,” also starring soprano Sally Wilfert, was released two days after Luker’s death in December. Green calls it beautiful and funny. (He understands this song, which is worth watching.)
Tonight, Luker’s colleagues and friends will tell stories and sing songs from his career at a fundraising concert you can stream. – Claire Moses, morning writer