On Friday, President Biden defended his proposal to raise the corporate tax rate from 21% to 28%, taking a swipe at Republicans by pointing out that even “wacko liberal” Ronald Reagan had taxed businesses at a higher rate of 28%.
Biden’s annual budget, which includes the proposed increase, is unlikely to pass Congress. During White House remarks celebrating strong job growth figures from February, Biden mentioned Reagan’s 28% tax rate and referred to him as a “wacko liberal guy” in a stage whisper.
Notably, Biden omitted the fact that during Reagan’s presidency, he had to collaborate with a House of Representatives controlled by Democrats, despite being a Republican who advocated for small-government policies.
According to the Tax Foundation, the corporate tax rate was reduced from 46% to 34% during Reagan’s presidency and remained at 34% when he left office in 1989.
In 2017, the tax-cut law introduced by former President Donald Trump reduced the corporate tax rate from 35% to the current rate of 21%, with the aim of aligning it with other countries and reducing business costs.
President Biden’s annual budget proposal includes other tax increases, but it is equally unlikely to pass due to the opposition from House Republicans.
The proposal includes an increase in the top individual tax rate to 39.6% (up from 37%) and a nearly doubling of capital gains taxes on assets such as stocks for those earning over $1 million annually, raising it from 20% to 39.6%.
Furthermore, the plan also proposes a 25% minimum tax on income and unrealized asset gains for individuals and families with a net worth exceeding $100 million, a new 15% minimum corporate tax for billion-dollar companies, and a fourfold increase in the stock-buyback tax rate from 1% to 4%.
To avoid paying up to $500,000 in taxes for Medicare, Biden used a Medicare tax loophole by routing income from his speaking fees and book profits through an “S-corporation” in 2017 and 2018.
However, under Biden’s new plan, the Medicare tax loophole will be closed, and the rate of Medicare taxes will be raised from 3.8% to 5% on incomes over $400,000.