Corporate DispatchPro GINA CHON VIA REUTERS BREAKINGVIEWS
Biden has lost a key battle against the super-rich Joe Biden has lost an important battle against the so-called 1%. The U.S. president repeatedly pledged that the super-rich and corporations would pay their fair share in taxes under his leadership. They’ll almost certainly pay more – just not enough to live up to his original promise. One of Biden’s pre-election rallying cries was to erase the different tax treatment of investment and regular income. That would remove an advantage private equity firms enjoy over “carried interest” – the profit from their investing activities – and help fund a $3.5 trillion spending bonanza on education, childcare and healthcare. Political reality, notably the slim Senate majority of Biden’s Democrats, has softened the president’s edges. Under the latest proposal, the wealthiest 1% of Americans will see after-tax income fall 5% next year, according to the Tax Foundation, compared with more than 11% in Biden’s original plan. Where the president wanted to raise the 20% capital gains tax to 39.6%, his proposed ordinary income rate, the latest target is just 25%. That might make a stock-market selloff less likely, but it gives buyout barons a pass. They can still pay a lower rate on fund earnings. There’s also less pain for corporations, whose income tax rate was cut from 35% to 21% under Donald Trump. Democrats in the U.S. House of Representatives now propose 26.5%, where Biden wanted 28%, though companies would also find it harder to shift profits abroad. The numbers may still change. Progressives effectively have the swing vote in the House; in the Senate, moderates do. Both chambers must approve the bill to make it law. Biden can still win a wider war. His plan would improve living standards for lower-income individuals, with means-based childcare
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