What's in Biden's newest $1.8T tax and spending plan?
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President Biden is poised to release $1.8 trillion spending plan that seeks to dramatically boost federal investment in education, child care and paid family leave, a sweeping measure funded largely by raising taxes on the top sliver of U.S. households.
The 10-year initiative, dubbed the American Families Plan, is the second piece of Biden's Build Back Better agenda, a wide-ranging economic proposal that includes the $2.3 trillion infrastructure and jobs plan released earlier this month. Biden is set to formally unveil the American Families Plan on Wednesday evening, during his first address before a joint session of Congress – his opening salvo in what's expected to become a contentious, monthslong negotiation with Congress.
Billed by the White House as a "once-in-a-generation investment" in the nation's future, the plan includes $1 trillion in spending over the next decade, as well as $800 billion in tax credits for the middle class. The proposal would be paid for by a slew of tax hikes, including nearly doubling the capital gains tax rate from 20% to 39.6% for households earning more than $1 million and restoring the top individual income tax rate to 39.6%, where it sat before Republicans' 2017 tax overhaul.
Here's a closer look at the key elements of Biden's plan:
Child tax credit
Biden wants to extend through 2025 an expanded version of the child tax credit that Democrats passed earlier this year with the American Rescue Plan.
The enhanced credit, which the IRS will begin delivering to families in July, provides $3,000 for every child ages 6 to 17 and $3,600 for every child under age 6. The amounts taper off once income hits $75,000 for individuals and $150,000 for married couples; if families earn too much to qualify for the expanded tax credits, they can still receive the $2,000 credit for their children if they earn less than 200,000 for individuals and $400,000 for married couples.
WHAT BIDEN'S CAPITAL GAINS TAX PROPOSAL COULD MEAN FOR YOUR WALLET
The IRS is slated to send the payments regularly, which amounts to $250 or $300 per child per month.
The proposal puts Biden at odds with some congressional Democrats who want the president to make the expanded child tax credit permanent.
The plan calls for having low- and middle-income families pay no more than 7% of their income on child care for kids under the age of five. Parents earning up to 1.5 times their state's median income would qualify for the program.
The measure would also provide funding to child care providers and boost wages for child care workers to $15 per hour. Additionally, the American Families Plan would make permanent a tax credit that provides families with up to $4,000 for the care of one child under the age of 12 or $8,000 for multiple children.
Paid family leave
Included in the plan is $225 billion to establish a paid family and medical leave program. It would provide partial wage replacement for workers who take time off to care for a new child or ill family member, recover from a health issue, deal with a family member's military deployment, recover from a serious illness, address domestic violence or take time off following the death of a loved one.
WHAT'S IN BIDEN'S $2.25T TAX AND INFRASTRUCTURE PLAN?
The plan guarantees 12 weeks of paid leave by year 10 of the program, and would replace two-thirds of workers' average wages, up to $4,000 a month.
The plan includes $200 billion for free universal pre-school for all 3- and 4-year-olds. All of the pre-school teachers will earn at least $15 per hour, and those with academic qualifications will receive pay equivalent to that of kindergarten teachers.