Biden eyes major tax hike in next economic plan

Yahoo Finance’s Rick Newman, Myles Udland and Brian Sozzi discuss Biden’s plans for a tax hike and wealth tax indecision.

Video Transcript

MYLES UDLAND: Let's start this morning on fiscal policy. Last week President Joe Biden, signing that $1.9 trillion stimulus plan into law. And now we're figuring out the next phase of Biden's plans, how we're going to pay for that, and also how we may pay for an infrastructure plan.

Yahoo Finance's, Rick Newman joins us now for the latest on all of this. And Rick, what's-- what's turning into a pretty bold fiscal approach here from the Biden administration. We get almost $2 trillion out the door within the first couple months of their swearing in. And now we are talking about the thing that kind of sat in the background of this, which was eventual tax hikes. So let's start with the tax plan and what we know now that might go towards funding.

RICK NEWMAN: Yeah, so it's not a set of tax hikes just for the sake of raising taxes, although that's going to get a lot of the attention. This is the funding mechanism, the revenue stream for what Biden's infrastructure plan is likely to be. So this is going to go hand in hand with an infrastructure plan, a lot of green energy initiatives. So unlike the stimulus bill, which was an emergency measure, which means Congress can fund it by borrowing all the money. If it's a non-emergency measure, there needs to be-- there need to be some so-called pay-fors in there and those are the tax cuts.

So this is going to take months to develop in Congress. But it's the next big thing that's coming out of Washington, probably. So this is going to be the focus of what's happening there for, I mean, into the summer and probably the fall when this might have a chance of passing.

BRIAN SOZZI: Rick, interesting to hear some comments from Janet Yellen over the weekend on a wealth tax. Specifically, she didn't shoot it down. How likely is something like that being passed?

RICK NEWMAN: You know, Biden's tax plan is very clear. I mean, he outlined everything he wanted to do when he was running for president last year. He did not call for a wealth tax the way Senator Elizabeth Warren and Senator Bernie Sanders did. In fact, at one point during the campaign last year, he described a wealth tax as kind of a punitive measure. He said we don't need to punish anybody.

Now the problem with a wealth tax is mainly that it's just very difficult to enforce because your wealth would get taxed every year. So somebody would have to determine how much your Picasso's and Renoir's are worth. And that's obviously a tricky business valuing illiquid assets.

Now Biden is going to sign whatever Congress passes. And Congress probably-- you know, Congress could develop a set of tax hikes that don't include everything that was in Biden's tax plan or include things that were not in Biden's tax plan. So I think Biden has no enthusiasm for a wealth tax. But, let's say, that was in the package that included all these other things he wants-- infrastructure, green energy, innovation, and stuff like that, I think he would sign it. It's just not something he's probably going to push for very hard.

MYLES UDLAND: Well, Rick, fortunately if we put all of our collectibles on the blockchain with NFTs and the like, then we can have a real time valuation on that. And it's going to be much, much easier to tax all that kind of stuff, you know. I don't know if people thought about that.