Biden's promise to tax the wealthy gets unexpected boost

US President Joe Biden's campaign promise to increase taxes on corporations and the wealthy gets an unexpected boost.

Biden’s proposals to increase tax rates hit a brick wall in Congress after Republicans -- and some Democrats -- opposed the measure. But on Wednesday a sudden reversal by West Virginia Democratic Senator Joe Manchin, a swing vote in the divided Senate, has given Biden's tax agenda a new lease on life, Reuters reported.  

Biden has often said in office that companies should instead pay a "fair share," that is used to fund roads and schools.

The new compromise bill includes $430 billion in new spending on energy, electric vehicle tax credits and health insurance investments.

Manchin and Senate Majority Leader Chuck Schumer said in a statement the bill pays for itself by raising minimum taxes for big companies and enforcing existing tax laws.

Biden said during a speech on Thursday that the deal would "for the first time in a long time begin to restore fairness to the tax code - begin to restore fairness by making the largest corporations in America pay their fair share without any new taxes on people making under $400,000 a year."

The bill would impose a 15 percent minimum tax on corporations with profits over $1 billion, raising $313 billion over a decade.

Research groups including the Institute on Taxation and Economic Policy have found that the US corporate tax rate dropped to 21 percent from 35 percent after a 2017 tax cut pushed by then-President Donald Trump and his fellow Republicans. But many companies even pay much less than that, and some of the largest pay no federal taxes.

Last year, Biden proposed hiking the corporate tax rate to 28 percent last year as part of an infrastructure spending bill, but the tax component was removed from the bill to steer his economic revival package through Congress.

The new Manchin-Schumer bill also aims to close the so-called carried interest loophole, long a goal of Democrats.

In March, Biden proposed a minimum tax on billionaires as part of the fiscal 2023 budget.

Biden's "Billionaire Minimum Income Tax" set a 20 percent minimum tax rate on households worth more than $100 million, in a plan that would mostly target the country’s over 700 billionaires, according to a White House fact sheet.

The fact sheet said Biden’s budget plan would require them to pay the minimum tax of 20 percent on all of their income including unrealized investment income that is now not taxed.

The tax will help reduce the budget deficit by about $360 billion in the next decade, the fact sheet added.

Democrats in the US Senate had proposed a billionaires tax to help pay for Biden's social and climate change known as "Build Back Better" although the spending package did not move forward due to lack of support in the Senate.

The plan aims to clamp down on some billionaires who find loopholes to avoid or significantly lower their tax payments.

The congressional sources said the tax would apply to taxpayers with more than $1 billion in assets or over $100 million in income for three consecutive years.

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