Treasury Secretary Janet Yellen said that a wealth tax was not likely to be a part of the mix as the Biden administration explores options for revamping the tax code.
“A wealth tax has been discussed, but it’s not something that President Biden has come out in favor of,” Yellen said at a New York Times conference. “I think it’s something that has very difficult implementation problems.”
Liberal lawmakers such as Sens. Bernie Sanders and Elizabeth Warren backed wealth taxes on the 2020 presidential campaign trail to pay for ambitious healthcare proposals. Earlier this month, Warren’s office said that the Massachusetts senator intends to introduce legislation for a wealth tax.
While a wealth tax might not be on the table for the Biden administration, Yellen said that the administration was considering revising parts of the tax code that allow capital gains to go untaxed, like the step-up in basis, which occurs when someone inherits assets with unrealized appreciation.
“President Biden has pledged not to raise taxes on households making less than $400,000, but, for example, capital gains escape taxation even at death due to step-up in basis,” Yellen said. “That might be something worth looking at.”
Yellen stressed that the focus of Biden’s tax changes would focus on increasing the corporate tax rate, which former President Donald Trump’s Tax Cuts and Jobs Act slashed from 35% to 21%.
“What President Biden has indicated is that he’s going to be looking at corporate taxation, closing loopholes, [and] trying to probably raise the corporate tax rate,” Yellen said. “Not as high as it was before 2017, but probably up to 28%.”
Some economists have warned that the Biden administration should hold off on tax hikes until the economic recovery is well underway and the spread of the coronavirus has been checked by a sufficient level of vaccination.
“The economy is in no shape to absorb a tax hike at the current time,” RSM’s Joe Brusuelas told the Washington Examiner. “Any tax hike that is considered should be phased in over a period of time and wait until the economy runs hot and back near full employment.”
Yellen also said that the administration would consider trying “to get rid of subsidies for fossil fuels and other inefficient forms and taxation.”
