US President-Elect Joe Biden to Propose Significant Tax Reform
Former US Vice-President Joe Biden has won the 2020 US presidential election. The battle was fierce, took several days to call and drove voters to the polls in record numbers. Because so many people voted early and by mail, it took election officials in many key states days to count all the votes – some are still counting. By Saturday the news outlets felt confident enough in the outcome to declare Joe Biden the President-elect. Fittingly, the votes from Biden's home state of Pennsylvania provided the necessary margin for him to win the Electoral College (see Note below). Although Pennsylvania put Biden over the top, other states – Nevada and possibly Arizona and Georgia – have provided additional margin, beyond the 270 Electoral College votes required for election.
Meanwhile, while Biden and Vice-president-elect Senator Kamala Harris, have called for healing and unity, Republican incumbent President Donald J. Trump has yet to concede the race, but instead has filed a number of lawsuits (many of them already dismissed) challenging the results.
During the campaign, Biden proposed to raise taxes on corporations and single filers earning more than USD 400,000 annually, which is expected to bring in USD 3.5 trillion over 10 years. Biden's tax plans would also require corporations and wealthy American taxpayers to pay more, through the following measures:
- raising the corporate tax rate from 21% to 28% (which is still lower than the pre-Trump rate of 35%);
- imposing a true minimum tax of 21% on foreign earnings of US companies;
- requiring all corporations to pay a 15% minimum tax on book income (i.e. income before tax);
- raising the top individual income tax rate from 37% back up to 39.6% (the top rate in effect under the Obama administration); and
- eliminating the lower 20% capital gains tax rate on investment income of more than USD 1 million annually, requiring taxpayers to pay the same rate as on wages.
Now that Biden has won the presidency, all eyes turn to two US Senate runoff elections in Georgia. Scheduled for 5 January 2021, the outcome of those two races will determine which party controls the US Senate next year. Should Republicans hold their majority, Biden will face an uphill battle to enact his tax plans.
Note: The United States elects its president and vice-president under the rules set out in the US Constitution. Voters do not vote directly for the candidates of their choice, but instead vote for a slate of "electors," pledged to particular candidates for president and vice-president. Each state is entitled to the number of electors equalling the number of members of the US House of Representative from that state, plus the number of senators (i.e. 2) from that state. In December, the electors pledged to the winners of the popular vote in each state meet to cast their ballots in the "Electoral College." There are a total of 538 electors for the United States, and it requires a majority of electoral votes, 270, to win.