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Here’s what’s in Biden’s $1.8 trillion ‘American Families Plan’

MarketWatch logo MarketWatch 5/1/2021 Robert Schroeder
Joe Biden wearing a suit and tie © Associated Press
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President Joe Biden has unveiled his American Families Plan, a sweeping, $1.8 trillion proposal aimed at domestic priorities like education and child care, to be paid for by extra taxes on the wealthy.

The president will pitch his proposal on Wednesday night in his first big speech to Congress, making an appeal directly to voters in a prime-time, State-of-the-Union-like address. Like Biden’s previously unveiled $2.3 trillion infrastructure package, however, the families plan will be a hard sell to congressional Republicans.

Now see: Biden’s first big speech to Congress is tonight. Here’s what to expect.

Also read: Biden’s proposed tax hikes could be a ‘double-edged sword’ for real estate — what homeowners and investors need to know

Here are some of the major elements of the families plan, as released by the White House.

Child care: One of the largest efforts in the plan, the White House is proposing $225 billion to make child care more affordable. Families would pay a portion of their income based on a sliding scale. The plan also funds training for child care workers.

Universal prekindergarten: Biden campaigned on this pledge, aiming to provide instruction to all three- and four-year-olds. The cost for universal instruction would be $200 billion.

Paid family leave: Biden during the campaign said he wanted 12 weeks of paid family and medical leave — this would cost $225 billion.

Free community college: Two years of free community college, at a proposed cost of $109 billion.

Child tax credits: Biden is seeking to extend through 2025 an expanded child tax credit enacted through the $1.9 trillion COVID-relief bill.

Cost of the plan — and paying for it: The overall plan is made up of $1 trillion in new spending and $800 billion in tax credits.

The plan would increase the capital gains tax to 39.6% from 20% for those earning more than $1 million annually. It also would raise the top marginal tax rate to 39.6% for households making more than $1 million. What’s more, Biden would give the Internal Revenue Service an $80 billion funding boost with the aim of bettering the agency’s fight against tax dodging by wealthy Americans. The administration estimates that effort would raise $700 billion over 10 years.

Now see: Young investors see a ‘buying opportunity’ if Biden raises capital-gains taxes on America’s millionaires

Also read: Biden rolls out $2.3 trillion infrastructure plan: ‘It’s bold, yes, and we can get it done’

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