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Greg Valliere, chief U.S. policy strategist AGF Investments.

Financial Planning > Tax Planning > Tax Reform

Biden to Make Last Attempt at Tax Hikes on Wealthy: Valliere

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What You Need to Know

  • A major tax package seems doomed, Valliere said.
  • Top Democratic aides, however, say Biden will push for raising taxes on wealthy Americans and highly profitable corporations.
  • The era of massive spending is coming to an end, according to Valliere.

While President Joe Biden’s Build Back Better legislation “is in tatters,” his administration will make one last attempt this summer to raise taxes on the wealthy, according to Greg Valliere, chief U.S. policy strategist of AGF Investments.

According to several top Democratic aides, Valliere said in his Friday morning Capitol Notes email briefing, Biden’s plan will take aim at: “Lowering the cost of prescription drugs, which has strong voter support in recent polls; funding for new Green projects; child care, probably pre-kindergarten measures; and raising taxes on wealthy Americans and highly profitable corporations.”

Sen. Joe Manchin, D-W.Va., once supported a $1.5 trillion Build Back Better measure, Valliere wrote, “which the White House would eagerly support now. It’s still possible that there could be agreement on the four issues above, but the ten-year price tag would be under $1 trillion.”

There are “two major implications” for the markets, Valliere said.

First, “the era of massive spending is coming to an end, as the deficit falls and Congress moves to the right in this fall’s elections,” he said.

Second, “a major tax package seems doomed, with lots of provisions the markets feared — a capital gains tax hike, a change in the step-up basis, an inheritance tax hike, etc. — now unlikely to pass.”

Biden aides, Valliere said, “are pointing fingers at Joe Manchin, but they concede that the failure of BBB is not just the result of opposition from the West Virginia maverick.”

Voters, he said, “are leery of more spending, which they connect with higher inflation, and the 50-50 Senate was always an obstacle. And Biden’s top aides, especially Chief of Staff Ron Klain, get mediocre grades.”

Biden “needs a staff shake-up or a big legislative victory but he may have to settle for modest bills this summer,” Valliere wrote.

“The only blockbuster would be dramatic student loan debt relief, which Biden may attempt to enact through executive order. That could be a winner for the Democrats, pleasing progressives but infuriating conservatives.”