According to Finance Minister Yellen, tax increases would likely be slow
Former Federal Reserve Chairman Janet L. Yellen, President-elect Joe Biden, who was elected Treasury Secretary, speaks to the Queen in Wilmington, DE on December 1, 2020.
Demetrius Freeman | The Washington Post | Getty Images
Treasury Secretary Janet Yellen said Thursday that any tax hikes sought by the Biden government to fund spending on large tickets would be phased in.
Yellen, speaking to CNBC’s “Closing Bell,” added that the proposed tax increases would likely come later in 2021 as part of a larger legislative package.
It would “include spending and investing over several years” on agenda items such as education and infrastructure, said the CFO. “And likely tax hikes to pay at least part of that, which would likely slowly materialize over time.”
Yellen’s comments are of particular interest to investors who have been searching for months’ insight into the timing or size of future tax increases.
Last month, the new Treasury Secretary testified that the US could afford to impose a higher corporate tax rate that corporations pay on their profits when they coordinate with other economies around the world.
During his campaign, President Joe Biden suggested increasing the corporate rate from the current 21% to 28%. Before former President Donald Trump’s tax cuts in 2017, the U.S. corporate rate was 35%.
Still, Biden and Yellen were both quick to say that plans for a higher corporate rate could only begin after the Covid-19 threat to the economy passes.
Biden “has said that as part of a larger package that would include significant spending and investment proposals – not now while the pandemic is really depressing the economy – he wants to reverse portions of the 2017 tax cuts that benefited the highest. Income Americans and big corporations, “Yellen said in January.
Biden’s Treasury Secretary also reiterated her belief that the government’s $ 1.9 trillion proposal could help the US get back to full employment in a year.
“We think it’s very important to have a big package [that] addresses the pain this has caused – 15 million Americans default, 24 million adults and 12 million children who don’t have enough to eat, small businesses fail, “she told CNBC’s Sara Eisen.
“I think the price of too little is much higher than the price of something big. We believe the benefits will far outweigh the costs in the long run,” she said, adding that given the fact, she wasn’t worried historical government spending is about rising inflation.
Yellen is the first woman to lead the finance department.
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