Is Biden’s Tax Plan Going Up in Smoke?

It looks like Joe Biden’s landmark legislation is running into some challenges in Congress.

Joe Manchin, one of the most powerful men in Congress right now, has pushed back on the $3.5 trillion bill and counter-offered with a more narrow $1.5 trillion plan. Progressive Democrats in the house are saying that it’s too small to make their priorities a reality.

Both sides of the aisle are pulling in opposite directions and don’t seem to be able to come to a compromise.

Joe Biden is making tax reform a major aspect of the Human Infrastructure plan. The increase of tax rates on those making more than $400,000 per year are the means for paying for part of the plan.

If the bill fails to pass, the current tax law expires in 2026. If it does pass, the Trump tax cuts will still be in effect for another 8 years. The time difference could be the determining factor in shifting your money to tax-free without bumping into a higher tax bracket.

Joe Biden is on the clock. If he can’t get this bill passed relatively soon, he’s going to convey the impression that his party is in disarray and they aren’t going into the midterm elections in a unified way.

Typically, the party in power needs to get their priorities done in the first two years. The stalemate in Congress runs the risk of pushing the legislation so far out into the future that nothing happens.

The bill will end up somewhere between the two extremes. There are other Senators and Congress people saying that the $3.5 trillion is too small while others are saying $1.5 trillion is the maximum.

Nancy Pelosi has recently abandoned the effort to tie the Infrastructure bill and Human Infrastructure bill together.

The longer this bill takes to pass or fail, the more likely failure becomes as congresspeople won’t want their name attached to it. This means that every day that goes by where this bill doesn’t pass, the likelihood is that the current tax rates are going to expire in 2026.

Mentioned in this Episode:

A top House progressive says $1.5 trillion is not enough to pass social spending plan – npr.org/2021/10/03/1042862107/a-top-house-progressive-says-1-5-trillion-is-not-enough-to-pass-social-spending-?t=1633978400218&t=1634060208587