US president Joe Biden plans to increase taxes on Americans earning more than $400,000 per year. The plan is part of a new budget the White House unveiled on Thursday.
The increased taxes would fund medicare for another 25 years, and would directly affect Biden, whose base salary is $400,000 a year. Together with his wife, Biden has a net worth of about $8 million.
“Millions of Americans work their whole lives, paying into Medicare with every working day — starting with their first jobs, even as teenagers,” Biden wrote on Tuesday in an essay in The New York Times. “Medicare is more than a government program. It’s the rock-solid guarantee that Americans have counted on to be there for them when they retire.”
The tax increase would come via the net investment income tax, which was passed alongside the Affordable Care Act in 2010. The policy increases this tax from 3.8% to 5% and expands the range of income included in it. The White House expects to collect about $700 billion over the next decade with the policy.
Republicans are likely to reject the increase, but the proposal shows that the president himself is willing to chip in to save the retirement program.
Biden’s plan to tax the rich
The higher tax is one among many Biden proposed that are designed to force rich Americans to pay more to support the functioning of the US government. Biden’s budget also included a 25% minimum billionaire’s tax and nearly doubling the capital gains tax from 20% to 39.6%.
There is strong economic evidence that when taxes are raised on high income earners that it doesn’t disincentivize those earners from working. Instead, it often means those earners pursue projects that bring them more prestige instead of more money.