- President Biden’s latest budget proposal includes a new minimum tax on America’s wealthiest.
- He wants that tax revenue to partially fund programs for families, like universal pre-k and childcare.
- It’s less certain whether other family-focused initiatives from Build Back Better will get tax support.
Social safety net programs from President Biden’s Build Back Better plan may be getting a second chance, albeit a slim one, and childcare funding is among them.
That’s because the White House announced this weekend a new plan for a minimum tax on the wealthiest Americans as part of its budget next year. Biden wants to use the revenue from that tax to boost the military’s budget, decrease the national deficit, and push social programs like childcare and mental health services.
It could mean that parents get the money Biden tried to funnel to them with his Build Back Better plan, which stalled on the Senate floor in January. But this tax isn’t likely to go through, either — the budget needs to be approved by Congress, and congressional Democrats weren’t even unanimous on Build Back Better, with Senators Krysten Sinema and Joe Manchin III being opposed to “billionaire taxes .” Manchin has already come out against Biden’s current bid for one.
Biden is proposing a 20% minimum tax on households worth $100 million or more that would expand the definition of taxable income to include increases in the value of assets like stocks where much of the wealthy’s net worth resides, known as unrealized
. Currently, taxes are only due on profits made when an asset is actually sold, or when those gains are realized. Biden’s plan would mean they are taxed along the way as their value appreciates, even if the assets remain unsold.
If passed, the White House estimates it would raise $360 billion over ten years — which could contribute to childcare relief for 20 million families.
Those unrealized capital gains have been a massive boon to the wealthiest families in recent years. During the pandemic, America’s 700+ billionaires added $1.7 trillion to their cumulative wealth, according to the left-leaning Americans for Tax Fairness.
BBB is stalled, but Biden is still pushing for relief for parents
Biden planned for a distribution of $100 billion to low and middle-income families over three years through Build Back Better, covering subsidized child care assistance for 20 million families, universal pre-kindergarten, and the Child Tax Credit, monthly payments for more than 39 million families that recently ceased.
Based on early reports from the Biden administration, it looks like the White House will persist in pushing some of those through, if they can be supported by an influx of cash from the proposed tax.
“Let’s provide universal preschool and cap the cost of childcare at 7% of a family’s income,” Biden posted on the POTUS Twitter account on Monday night. “For families, that will cut the cost of childcare in half.”
Eligibility for subsidized childcare under the original plan meant that the federal government would take on 90% of the subsidy burden, with states being responsible for the remaining 10%. Families of four making less than $75,000 per year would pay nothing for child care, with the household increase as their income does. Families of four making $100,000 have a $2,000 annual copayment; families of four making $150,000 will have a $10,500 copayment, etc.
What’s less clear is whether the monthly checks parents received from the expanded child tax credit would come back, after it expired at the end of last year, or whether the White House will be steering federal cash to boost wages for child care workers, as Build Back Better outlined.
Any implementation of these measures may go a long way toward providing children with long-term stability, experts say.
“The bill as a whole would reduce poverty substantially, and especially child poverty,” Kris Cox, deputy director of federal tax policy at the Center on Budget and Policy Priorities, told CNBC. The expansion of the child tax credit under the American Rescue Plan, for instance, has been shown to greatly reduce child poverty.