President Biden is set to formally propose an array of tax increases on wealthy individuals and corporations in a budget plan that he says will reduce the deficit by $2 trillion over the next decade, setting up a battle royal with Republicans on Capitol Hill.
Biden told lawmakers during his State of the Union address last month that his budget will lower the deficit and extend the solvency of the Medicare Trust Fund “by making the wealthy and big corporations begin to pay their fair share.”
He has pledged not to raise taxes on anyone earning less than $400,000 annually.
The White House on Tuesday unveiled a proposal to raise the Medicare surtax on earned and unearned income above $400,000 from 3.8 percent to 5 percent.
Late last month, the president proposed a new tax on wealthy households that would require individuals and families worth more than $100 million to pay a 20 percent tax on income and the unrealized gains of liquid assets such as stocks.
Republicans say Biden’s budget will be dead on arrival when the president formally sends it to Capitol Hill on Thursday.
“You know the president’s budget is replete with what they would do if they could — thank goodness the House is Republican — massive tax increases, more spending,” Senate Republican Leader Mitch McConnell (Ky.) told reporters.
McConnell said “the American people can thank the Republican House” that Biden’s proposed tax increases “will not see the light of day.”
The administration is also expected to propose a quadrupling of the stock buyback tax that was included in the Inflation Reduction Act that Democrats passed through the House and Senate on party-line votes last year. That legislation set a 1 percent surcharge on corporate stock buybacks.
Biden is expected to reintroduce two staples of his 2021 Build Back Better agenda, raising the top marginal income tax rate from 37 percent to 39.6 percent and raising the corporate tax rate from 21 percent to 28 percent.
The president has little chance of enacting the proposed tax hikes given Republican control of the House but they serve as a starting negotiating position in talks with Speaker Kevin McCarthy (R-Calif.) to raise the debt limit.
Senate Majority Leader Chuck Schumer (D-N.Y.) on Tuesday praised Biden’s budget and called on House Republicans to introduce their own plan to reduce the deficit ahead of any talks on raising the debt limit.
Schumer said Biden’s plan would lower the deficit by $2 trillion and do it “by making the billionaires and big corporations pay their own share.”
“We continue to wait and wait and wait for Speaker McCarthy’s plan on debt ceiling,” he said.
Updated 8:28 a.m. March 9