White House proposes two new tax brackets for millionaires to pay for social spending

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The Biden administration said that the framework for the Democratic infrastructure and social spending bill will be partially financed by new taxes for millionaires.

Included among a menu of changes to the tax code provided by the White House Thursday morning are surtaxes designed to target high earners. The White House proposes a 5% surtax on income above $10 million and an additional 3% surtax on individuals who are earning more than $25 million annually.

The plan also intends to close “loopholes” that allow some wealthy people to avoid paying a 3.8% Medicare surtax on their earnings, the administration said on Thursday.

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The new tax proposals target the incomes, not the wealth, of high earners and so are by nature very different than Sen. Ron Wyden’s proposal to tax the unrealized capital gains of about 700 of the wealthiest people. Wyden’s proposal was being discussed as a possible spending solution on Wednesday, but just hours after it was unveiled, it appeared to be rejected by key Democrats in the Senate and House.

Other tax changes in the new framework include the adoption of a 15% country-by-country minimum tax on the foreign earnings of U.S. corporations, which key swing vote Kyrsten Sinema of Arizona had reportedly been open to. The framework would also apply a 1% surcharge on corporate stock buybacks.

Taken together, the White House asserts that the tax measures will net nearly $2 trillion in savings and revenue, enough to pay for the social spending package.

It is unclear if the White House has the support of every Democratic senator for the plan, although officials assert that the framework will clear both chambers of Congress and hand the administration a win, albeit a scaled-back one from the initial $3.5 trillion proposal.

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