(Bloomberg) -- President Joe Biden’s proposed tax hikes are forecast to bring in $3.6 trillion over the next decade, the Treasury Department said Friday, a key funding source for the $4 trillion he hopes to spend remaking the American economy and social safety net.
The figure, representing the sum of all tax increases if enacted by Congress, came as is part of the “Greenbook” report that accompanies the White House’s $6 trillion 2022 budget request, also released on Friday. It effectively serves as the revenue side of the ledger, against Biden’s spending priorities in the budget.
After accounting for the $1.2 trillion in tax credits for clean energy, electric cars, low-income families and housing investment, the plan would net Biden about $2.4 trillion to invest in other economic priorities. The White House has said that the $4 trillion combination of its American Jobs Plan and American Families Plan would be fully paid for over 15 years.
The Greenbook, which hasn’t been released since President Barack Obama’s final year in office, is the most comprehensive look at the tax and revenue proposals the administration endorses.
The document spans the gamut of Biden proposals, including a global minimum corporate tax, an increase in the levy on capital gains at death and closing the carried interest tax break for fund managers, all of which Biden has already outlined in his funding proposals for his longer-term spending plans.
The top income tax rate would increase to 39.6% from 37% starting in 2022, according to the proposal. Married couples earning $509,300, individuals earning $452,700 and heads of households earning $481,000 would be affected by the increases.
The Greenbook proposal assumes the capital gains increase would take effect on the date it was announced, a Treasury official said on a call with reporters. That proposal was announced in late April.
The reason for doing that is to prevent acceleration of gains during a temporarily low tax rate, another official said. But Treasury will work with Congress to determine the appropriate effective date, the person said.
Tax Credits
The Greenbook also includes key tax-credit proposals that Democratic lawmakers see as crucial to campaign on during the 2022 midterm elections. The administration is calling for an extension of an expanded child tax credit through 2025, as well as benefits for green energy and electric vehicles.
While Congress is unlikely to enact Biden’s tax ideas wholesale, the Greenbook has political significance by detailing the proposals that have the support of the White House.
Democrats will likely have to scale back some of the ideas to be able to pass them through their razor-thin majorities in Congress. Some Senators, including Joe Manchin of West Virginia and Mark Warner of Virginia, have expressed concerns about Biden’s corporate tax rate and capital gains plans.
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The document wills serve as a starting point for congressional Democrats to begin turning Biden’s agenda into legislation. House Ways and Means Chairman Richard Neal and Senate Finance Committee Chair Ron Wyden have already begun sifting through Biden’s broad outlines and preparing to move legislation later this year.The discrepancies between the proposal’s projected cost and revenue raisers will present a challenge for Congressional Democrats as they look to enact Biden’s economic agenda, which he says he wants to fully pay for. Pressure from moderates to pare down the tax proposals and procedural rules in the Senate puts limits on how much the legislation could cost could both prove to be stumbling blocks as Democrats negotiate.
The president’s proposal also omits a key priority for some House Democrats, an expansion of the state and local tax, or SALT, deduction. More than 20 lawmakers from high tax states have said they would oppose Biden’s economic agenda unless it also included an expansion of that write-off, which is currently capped at $10,000.
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