In his budget plan, President Biden is expected to introduce a range of tax hikes targeting affluent individuals and corporations. The President believes that these measures will help decrease the deficit by $2 trillion over the next ten years while also extending the solvency of the Medicare Trust Fund. This proposal is expected to spark a contentious debate with Republican lawmakers on Capitol Hill.
During his State of the Union address, Biden informed lawmakers that his budget would reduce the deficit and preserve the solvency of the Medicare Trust Fund by ensuring that the wealthy and large corporations start contributing their fair share.
On Tuesday, the White House introduced a plan to increase the Medicare surtax from 3.8 percent to 5 percent for earned and unearned income above $400,000.
In addition, President Biden had previously proposed a tax hike for wealthy households last month. This proposed tax would require individuals and families with a net worth exceeding $100 million to pay a 20 percent tax on income and unrealized gains from liquid assets such as stocks.
However, Republicans have expressed opposition to Biden’s budget plan, stating that it will not be accepted when the President officially submits 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.”
It is anticipated that the administration will suggest a four-fold increase to the stock buyback tax, which was initially incorporated in the Inflation Reduction Act passed by Democrats through the House and Senate on a partisan basis last year. The previous legislation included a 1 percent surcharge on corporate stock buybacks.
It is anticipated that Biden will revive two key components of his Build Back Better plan from 2021. This includes the proposal to increase the top marginal income tax rate from 37 percent to 39.6 percent, and the suggestion to increase the corporate tax rate from 21 percent to 28 percent.
However, due to Republican control of the House, it is unlikely that the proposed tax hikes will be implemented. Nevertheless, they may serve as a point of negotiation for discussions with Speaker Kevin McCarthy (R-Calif.) to raise the debt limit.
On Tuesday, Chuck Schumer, the Senate Majority Leader from New York, applauded Biden’s proposed budget and urged House Republicans to develop their own proposal to decrease the deficit before any discussions on increasing 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.