Washington, D.C. — A new report from the Center for American Progress examines the ways in which President Joe Biden’s Build Back Better plan addresses fundamental problems with the tax code, while proposing further steps that Congress can take to efficiently raise additional revenue from the wealthy and corporations. The report emphasizes that now is the time to fix these fundamental problems and that half-measures are not enough.
For decades, the U.S. tax code has been slanted against working people, allowing wealthy individuals and corporations to avoid paying their fair share. If enacted in full, President Biden’s Build Back Better agenda would raise an estimated $3.6 trillion in revenue from wealthy individuals and corporations by closing the loophole that allows capital gains to escape income tax; making large corporations pay their fair share, including by shutting down offshore tax havens; and by increasing IRS funding and requiring better information from banks to enable the IRS to spot tax cheats.
In “Addressing Tax System Failings That Favor Billionaires and Corporations,” Seth Hanlon and Galen Hendricks identify additional steps that Congress can take to raise substantial revenue without raising taxes on families or individuals with incomes of less than $400,000. The report proposes that Congress should also consider:
- Phasing out the pass-through deduction for taxpayers earning more than $400,000 in income
- Implementing a surtax on the adjusted gross income of wealthy individuals
- Limiting tax deductions for top-bracket taxpayers
- Addressing the tax preference for stock buybacks
- Repealing the foreign-derived intangible income tax break without replacing it with new benefits for corporations
- Expanding limits on corporate deductions, including deductions for executive compensation
- Strengthening the estate tax
“This fall, Congress has the opportunity to fix the most fundamental problems in the tax code, while funding programs such as the child tax credit and guaranteed paid family and medical leave as well as creating clean energy jobs,” Hanlon said. “President Biden has laid out a plan that would both increase fairness and raise revenue for the critical investments in his Build Back Better agenda. It is incumbent on Congress to fix the most fundamental failings of the tax code, such as billionaires paying virtually no taxes on their gains. And Congress should also consider additional measures such as phasing out the Trump tax law’s pass-through deduction for wealthy taxpayers to raise revenue and reduce inequality.”
Read the report: “Addressing Tax System Failings That Favor Billionaires and Corporations” by Seth Hanlon and Galen Hendricks
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