The Lead: Biden's Bold Plan
President Biden gave his first State of the Union address on Wednesday and announced the American Families Plan, a spending bill that the President says is a “once-in-a-generation investment in our families and our children.”
The plan has four priorities:
- Offer four additional years of public education for all children with two years of preschool and two years of community college. The President made an important distinction that this pre-K education was “school, not daycare.”
- Offer access to affordable childcare for all families. Middle-income families will pay no more than 7% of their income for childcare and low-income families will pay nothing.
- Offer up to 12 weeks of paid family medical leave.
- Extend the child tax credit through the end of 2025. This is the tax credit of $3,000 for children 6 years and older and $3,600 for children under 6 years old. It was increased in the President’s Covid-relief bill and he estimates that it will help address poverty for 65 million children.
The President also wants to extend lower premium guarantees for anyone who gets their healthcare from the Affordable Care Act, as well as permanently lower the cost of prescription drugs.
And now the ever-present question:
How do we pay for this?
With a tax hike for the wealthiest Americans. The President proposes asking corporate America and the wealthiest Americans to “pay their fair share. Just their fair share.”
Fair is not an objective term though. It is defined along party lines. The President’s plan would increase the highest tax rate to 39.6%, add the 3.8% Medicare tax to all high-income earners, and match capital gains tax rates to taxpayers’ tax brackets. Currently, capital gains, or taxes paid on the profit of an asset, has a maximum 20%. Under the new plan, taxes paid on that sale will be the same tax rate that taxpayers pay on any income.
This is pretty much in line with what we expected. And now we expect Republicans to fight back like hell against this. Game on.