What will come in Biden’s budget proposal? A call for a ‘billionaires’ tax’ and higher corporate taxes
WASHINGTON – Wealthy Americans will pay higher taxes under the proposed budget President Joe Biden will send to Congress on Thursday, but Biden says he will keep his promise not to raise taxes on middle-class Americans.
“I want to make it clear: I want to raise some taxes,” Biden said during a trip to Virginia Beach, Va., last week.
But people making less than $400,000 a year “will not pay an extra dime in any taxes,” he said.
The budget plan will be the first that Biden has submitted to the Republican-controlled House, which is unlikely to go along with his proposal to raise some taxes. Congress is responsible for writing the federal budget, and Biden’s spending plan will become the starting point for negotiations between lawmakers and the White House.
This year’s budget negotiations will come amid a brewing battle between congressional Republicans and the White House over raising the limit on how much money the federal budget can borrow. House Republicans say they won’t raise the debt ceiling unless Biden agrees to sharply cut spending.
If Congress doesn’t raise the borrowing limit, it will The US Treasury will run out of money to pay government bills such as Social Security and military paychecks this summer, according to the nonpartisan Congressional Budget Office.
What is Biden’s billionaire tax?
Biden has not provided details on his latest plan to raise taxes on the wealthy. But during his State of the Union address in Februaryhe called on Congress to “reward work, not just wealth” and pass his proposal for a billionaire’s minimum tax.
His so-called “billionaires tax” is likely to reflect a proposal he offered last year. That plan called for a 20% minimum income tax on multimillionaires and billionaires, which Biden said would lead to a fairer tax code and would prevent the nation’s highest earners from paying a smaller share than middle-class Americans.
The tax would apply to US households with more than $100 million – about 0.01%, representing the 700 wealthiest Americans. That could generate an additional $361 billion in tax revenue over the next decade.
The push for a billionaire minimum tax comes amid a debate about the unequal distribution of wealth and whether the rich pay their fair share. In a typical year, billionaires pay an average tax rate of just 8%, according to the White House. A minimum tax would ensure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters, Biden said.
Higher tax on share buybacks by companies
During his State of the Union address, Biden also called on Congress to quadruple the new tax on corporate stock buybacks.
A bill Biden signed into law last year requires companies to pay a 1% excise tax on purchases of their own stock, effectively forcing them to pay a penalty for a maneuver they’ve long used to return cash to their CEO and investors and boost their share price.
Corporate share buybacks have exploded in recent years as companies have cashed in from record profits. Some of the world’s largest oil giants report, for example billions of dollars in annual profits for 2022 – a year when consumers across the globe faced skyrocketing energy prices. At one point last year, the average gas price in the US reached $5 per barrel. gallon.
Biden argues that energy companies should invest more of those profits in boosting domestic production and keeping prices down. Quadrupling the tax on stock buybacks would encourage long-term investment, Biden said.
Will Biden try to raise corporate taxes?
As a presidential candidate, Biden promised to raise taxes not only on the wealthy, but also on large corporations. A tax plan pushed by then-President Donald Trump and congressional Republicans in 2017 cut the corporate tax rate to 21% from 35%, although many businesses pay much less.
Biden proposed raising the corporate tax rate to 28% last year. But that plan died in the Senate under objections from Sens. Joe Manchin, DW.Va., and Arizona’s Kyrsten Sinema, who was a Democrat at the time but has now become an independent.
The White House would not say whether Biden plans to revive that idea in his new budget proposal. But raising corporate taxes would be one way to raise money for new programs and help Biden keep his promise to lower the federal deficit by $2 trillion over 10 years.
However, the chances of such a proposal getting through Congress are even more remote now that Republicans are in charge of the House.
Michael Collins covers the White House. Follow him on Twitter @mcollinsNEWS.
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This article originally appeared on USA TODAY: Biden budgets to call for billionaire tax, higher corporate taxes