In his State of the Union speech, U.S. President Joe Biden announced his intentions to increase corporate minimum taxes and decrease deductions for CEO salaries and company jets. Biden also committed on Thursday to raising taxes on large corporations and rich Americans.
Biden gave an overview of the measures included in a proposed fiscal 2025 budget that is expected to be unveiled next week. The budget seeks to help middle-class homebuyers and reduce taxes for low-income Americans while reducing the government deficit by $3 trillion over a ten-year period.
He suggested a new tax credit that would provide the equivalent of $400 a month for the next two years to offset high mortgage rates, assisting Americans in purchasing their first houses or upgrading to larger ones. Additionally, Biden demanded that title insurance be removed from refinancings of federally backed mortgages, a move that can save homeowners $1,000 or more.
The Democratic presidential candidate’s tax policies are anticipated to be a major focus of his reelection campaign. In contrast, GOP contender Donald Trump recently signed a package that reduced taxes for businesses, the affluent, and a large portion of the middle class.
“I’m an investor in capital. Do you wish to become wealthy, or wealthy enough? That’s fantastic. Simply pay your fair amount of taxes, Biden urged, pointing out that the tax cuts implemented under Trump “exploded the federal budget.”
The majority of Biden’s tax plans are unlikely to be implemented until Democrats take control of both chambers of Congress in November, which polls do not seem to be likely to happen.
Apart from his earlier demands to increase the corporate income tax rate from the existing 21% to 28%, he also asked for an increase to “at least” 21%” for the 15% corporate minimum tax that he won as part of 2022 clean energy legislation. The tax applies to firms reporting over $1 billion in profits.
President Biden has proposed several changes to the US tax system, including a 1% tax on corporate stock buybacks, stricter limits on executive pay deductions, and a “billionaire tax” that would impose a 25% minimum tax on income for Americans with wealth of more than $100 million. This would raise $500 billion over 10 years to fund benefits such as child care and paid family leave. The average American worker paid about a 25% tax rate in 2022, and the average tax rate for some 1,000 billionaires was 8.2%. Biden also pledged to extend Trump-era tax cuts for those earning under $400,000, revive a COVID-era expansion of the Child Tax Credit, and increase a tax credit for low-wage workers.
However, the U.S. Chamber of Commerce criticized Biden’s proposals, arguing that they would result in lower economic growth, fewer new business starts, less job creation, and fewer choices for American families. However, Chuck Marr, head of tax policy at the left-leaning Center on Budget and Policy Priorities, said Biden’s “course correction” would make the U.S. tax system fairer. Biden also pledged to crack down on “price gouging” and proposed rules on cable, travel, utilities, and online ticket sellers, ensuring that consumers know the total price upfront.
(Reuters)
