President Joe Biden is set to announce an ambitious $1.8 trillion American Families Plan during a speech before Congress today.
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The plan would be funded by a tax increase for taxpayers at the highest income levels in the United States.
The proposal, which mostly covers areas such as child care, guaranteed paid maternity leave of 12 weeks, education and healthcare is part of the president’s multi-trillion dollar agenda. The president is expected to outline more details on his plan this afternoon during his first speech to a joint session of Congress. The American Families Plan is in addition to his massive infrastructure plan announced a couple of months ago.
One of the largest areas of focus in his new plan is an expansion of the Child Tax Credit that is currently being offered for only one year through the stimulus relief package. The American Families Plan would extend the expansion through 2025, according to a fact sheet issued by the White House. The extension might’ve been spurred by Democratic lawmakers’ introduction of a House bill on Tuesday that would make the the tax credit expansion permanent. Biden’s plan is separate from the House bill.
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President Biden is also calling for $200 billion for “free universal pre-school for all three- and four-year-olds and $109 billion for two years of free community college so that every student has the ability to obtain a degree or certificate,” the fact sheet states.
The plan would also invest $225 billion so that families will only pay a “portion of their income based on a sliding scale” for child care. This would mean that child care costs for young children would be fully covered “for the most hard-pressed working families,” and families earning 1.5 times their state median income would pay no more than 7% of their income towards child care.
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The plan provides a range of child-care options, including child care centers and family child care providers, Early Head Start and public schools.
Of controversy surrounding the plan is how Biden intends to fund it. The White House claims that the top tax rate will return to the 39.6% it was before the 2017 rules changed it to 37%.
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In one of the more pressing concerns for Wall Street, President Biden is also slated to end capital income tax breaks, as “the tax rate the wealthy pay on capital gains and dividends is less than the tax rate many middle-class families pay on their wages.” He is proposing that households making over $1 million will pay the same 39.6% rate on all their income.
Biden is also proposing to eliminate a real estate tax break that allows investors to defer taxation on property exchanges resulting in gains of more than $500,000, and close the carried interest loophole so that hedge fund partners pay ordinary income tax rates on their income.
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