Biden, under pressure throughout the presidential campaign to move left on a range of policy issues, has embraced several ideas to increase taxes on the rich and on corporations but so far has not gone as far as his two main rivals.
Sens. Elizabeth Warren (Mass.) and Bernie Sanders (I-Vt.) have each unveiled their own plans to impose a “wealth tax” on multimillionaires and billionaires, with both also calling for significant new taxes on corporations and wealthy estates. Sanders unveiled his wealth tax earlier this week.
An aide to Biden confirmed that the campaign is working on tax policy proposals but would not confirm that a Wall Street tax is in the mix. A statement from the campaign added that the vice president will introduce new tax policies to illustrate how he will pay for his proposed expansions in government spending.
Biden “has and will continue to put forward details regarding how he will finance his biggest plans, because the stakes are too high not to be straightforward with the American people about how much they will cost and who will pay for them,” Andrew Bates, a campaign spokesman, said in a statement.
Biden expressed interest in a financial transaction tax toward the end of the Obama administration when it was brought up by economic advisers, said Dean Baker, senior economist at the Center for Economic and Policy Research. Baker said the vice president had been particularly impressed at a meeting by how much money could be raised solely by taxing Wall Street.
A financial transaction tax similar to that proposed in the Senate by Sen. Brian Schatz (D-Hawaii), although less aggressive than Sanders’s plan, would raise close to $800 billion over 10 years, according to the nonpartisan Congressional Budget Office.
Tax experts said Biden’s embrace of that idea would mark just how much more aggressive Democrats are now willing to be on taxes.
“To have a leading presidential candidate, who is considered a moderate, take a position so counter to Wall Street — that would be a big step, no question about it,” said Frank Clemente, executive director of Americans for Tax Fairness, a liberal group focused on tax equity. “The vast majority of revenue it generates is from the wealthiest Americans, who have the most amount of money to contribute.”
Conservatives are likely to oppose such a measure. Nicole Kaeding, vice president of policy promotion at the National Taxpayers Union Foundation, pointed to research suggesting the tax could increase volatility in the stock market by increasing the cost of acquiring securities, and therefore interfering with capital flows.
Biden has already called for raising the tax rate paid by corporations from 21 percent to 28 percent — the Republican tax law of 2017 lowered it from 35 percent to 21 percent — as well as increasing the rate paid by the richest taxpayers.
Biden has also proposed raising capital gains taxes on millionaires, ending incentives to move corporate profits abroad, and eliminating a loophole that allows heirs to receive capital gains tax-free, according to his campaign.
But Biden has stopped short of the wealth tax embraced by Warren and Sanders, an idea championed by some left-wing economists that would raise significantly more revenue than what the former vice president has pitched.
Warren’s wealth tax would raise close to $3 trillion from a few hundred of the richest people in the country, according to her campaign. Sanders’ plan would hit more wealthy people and do so at a higher rate, and his campaign says it would halve the wealth held by billionaires in the United States.
Both versions of the wealth tax have alarmed the business community and drawn the scorn of conservatives and more-centrist Democrats. Critics of the liberal senators have said they overstate how much money a wealth tax would bring in. Other opponents argue the wealth tax is unconstitutional and likely to be struck down by the courts.
Sanders and Warren have previously embraced a financial transaction tax, but it has typically been proposed by the party’s left flank rather than its more-centrist lawmakers.
In the 2016 presidential election, Sanders proposed an aggressive tax on stocks and bonds as a way to finance his plan to fund tuition-free public colleges and universities. (Sanders is again citing the Wall Street tax as a way to fund his education plan, including student debt forgiveness, in 2020.) Warren voiced support for the idea as well.
In the 2016 race, Democratic presidential nominee Hillary Clinton ran on a much more limited financial transaction tax than what is being considered by Biden’s advisers.
If Biden embraces a financial transaction tax, it is less likely to be challenged on constitutional grounds but would also be far less likely to raise as much revenue as the wealth tax, according to tax experts.
Gabriel Zucman, an economist at the University of California at Berkeley who has worked with Sanders and Warren on the wealth tax, said: “An FTT is not necessarily a bad idea in itself, but it won’t fix inequality and won’t raise nearly as much revenue as a wealth tax. The most direct and powerful way to curb the rise of inequality is a progressive wealth tax.”