Joe Biden has said he’ll make college and healthcare more affordable as president, all while moving the country toward more renewable energy sources. Sounds great! But those changes will come with a price tag to the tune of more than $3 trillion. And after months of criticizing other candidates’ plans as being half-baked, Biden has revealed his own plans. So let’s take a look.
At first glance, it looks like Uncle Joe is trying to recreate his vice presidency and the good old Obama years with his proposal. He would undo some of the tax reductions from the Tax Cuts and Jobs Act of 2017 and return those taxes to Obama-era levels. And unlike other candidates who want Medicare for all, he’s not willing to throw out the current healthcare system (aka Obamacare) to start from scratch.
Biden is essentially setting himself up as one of the more moderate Democrats on the 2020 playing field. And while his plan is less exciting than Senator Warren’s and Sander’s plans to tax the rich and give to just about everyone else, Biden’s proposal could be a more realistic shift after President Trump’s tax cuts.
According to Bloomberg News, which got a copy of the proposal, Biden plans to raise $400 billion over 10 years from collecting corporate taxes alone. In total, he’s proposing $3.4 trillion in tax increases to fund his policies.
There are a few big buckets where Biden wants to spend money:
He’s a fan of the Affordable Care Act that was enacted while he was vice president, and wants to increase the value of tax credits in order to reduce the upfront cost for families buying coverage. He plans to cap insurance premiums for marketplace plans to 8.5% of an individual’s income. This will cost less than $1 trillion, according to The Washington Post.
For higher education, Biden wants to make two years of community college or trade school free for everyone, double the maximum value of federal Pell grants., and expand income-based repayment options for federal student loans. Doing so will cost about $750 billion.
Biden also wants the federal government to invest $1.7 trillion into clean energy and environmental justice.
Here’s how he’d fund his plans, according to Bloomberg’s breakdown:
$800 billion: Tax capital gains as income for people who have more than $1 million.
$730 billion: Raise the corporate tax rate to 28%. It had been 35% before the 2017 tax cuts, when it was reduced to 21%.
$440 billion: End the stepped-up basis, which adjusts the value of assets passed on to a beneficiary to minimize their capital gains tax.
$400 billion: Introduce a 10% minimum corporate tax. It would tax companies that reported net income of more than $100 million but paid zero (or negative!) federal taxes due to breaks for building facilities, paying employees in stock, or carrying over losses from unprofitable years, Bloomberg explains.
$340 billion: Tax foreign profits at 21%. This would double the current rate of 10.5% that’s been in place since the 2017 tax changes.
$310 billion: Cap tax deductions for the wealthy.
$200 billion: Crack down on illegal tax havens in Ireland, the Netherlands, the Cayman Islands and Bermuda.
$90 billion: Raise the top individual income tax rate to 39.6%, reverting what the maximum had been before Trump’s tax cuts.
$70 billion: Close tax loopholes benefitting real estate investors.
$40 billion: End fossil fuel tax breaks.
If Biden’s $3.4 trillion plan doesn’t seem like a lot compared to some other candidates’ plans to fund their policies, that’s because … it’s not that much.
It’s not as lofty of a plan as, say Senator Elizabeth Warren’s $52 trillion to pay for Medicare for all, but there are some similarities. Biden and Warren both want to tax capital gains income for the rich, crack down on tax evasion.
Senator Bernie Sanders’ plan to pay for his Medicare for all proposal also hinges in part on limiting tax deductions for the wealthy, taxing capital gains as income, and taxing profits held offshore.