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- The new infrastructure bill could cost more, and have greater tax hikes, than originally anticipated.
- The Washington Post reports the package could total $4 trillion, with up to $3.5 trillion in tax hikes.
- Democrats have suggested various new tax hikes while Republicans have opposed all of them.
- See more stories on Insider's business page.
President Joe Biden is expected to unveil his massive infrastructure plan on Wednesday, but it could surprise to the upside.
While the plan was initially thought to have a $3 trillion price tag, it could now reportedly cost as much as $4 trillion, and could also include $3.5 trillion in tax hikes.
Last week, The New York Times first reported details of the upcoming infrastructure proposal. In that report, sources familiar with the plan said could cost up to $3 trillion, which was confirmed to Insider. According to documents obtained by the Times, the plan will be split into two separate legislative pieces: One focused on rebuilding infrastructure such as roads and bridges, and another focused on the care economy, with funding for things including universal pre-K and free community college.
But on Monday, three sources familiar with the matter told The Washington Post that the White House is expected to push for as much as $4 trillion in spending on infrastructure and for as much as $3.5 trillion in tax hikes.
The sources said that administration officials worried about the risk that the large gap between spending and revenue would widen the deficit so much could trigger a spike in interest rates, and increasing taxes would help mitigate that.
On Wednesday, Biden is expected to unveil the first legislative piece of the infrastructure plan, which would focus on rebuilding roads and bridges, expand clean energy investments, create infrastructure for electric vehicles, and more. This part of the plan would also include funding for disabled and elderly care.
As for the second part of the plan focused on the care economy, White House Press Secretary Jen Psaki said on Fox News Sunday that it will be released "in just a couple of weeks" and "will address a lot of issues that American people are struggling with."
"The total package we're still working out, but he's [Biden] going to introduce some ways to pay for that, and he's eager to hear ideas from both parties as well," Psaki said.
Biden has already shown a historic willingness to go big with recovery packages, a contrast to the stimulus packages enacted during the Obama-era recovery during the Great Recession.
Tax hikes may be on their way - and Republicans don't like that
As The Washington Post writes, the focus on the deficit could help appease critics who worry about spending - but it also lays out a big challenge for Biden. The White House would need to get Congress on its side to enact its reported tax increases, which "together would represent the largest tax hike in generations."
Lawmakers have already begun floating a host of ideas to fund the infrastructure package, with tax hikes on the table. Moderate Democratic Sen. Joe Manchin of West Virginia told Axios in the beginning of March that an infrastructure bill could be as large as $4 trillion if it's funded by tax hikes, but made it clear that he would not support using reconciliation to pass it, as the $1.9 trillion stimulus was.
Biden has been reportedly eyeing a tax increase, with wealthier Americans and corporations as the primary targets.
Biden said during his campaign that he would increase the corporate tax from 21% to 28% - still lower than its 35% rate prior to former President Donald Trump's tax cuts. He's also reportedly been looking at adjustments to the stepped-up basis, as well as expanding the capital gains tax. He may also raise income taxes to as high as 39% for Americans making over $400,000 a year.
But Republican lawmakers are unlikely to support tax hikes to fund infrastructure. In fact, some have been pushing for the opposite of Sanders' proposed increase to an estate tax, instead calling for it to be repealed.
"I don't think there's going to be any enthusiasm on our side for a tax increase," Senate Minority Leader Mitch McConnell told reporters last week.