The president’s tax plans are a nonstarter in the Republican-controlled House. But they do set a stark contrast between his policy priorities and GOP efforts to cement Trump-era tax cuts ahead of the upcoming election.
“There is no way these proposals can pass a divided Congress — especially in an election year,” wrote Brian Gardner, chief Washington policy strategist at Stifel Investment Bank, in an analysis.
But Gardner added, “2025 will be the year of the tax debate regardless of which candidate wins the presidency since several provisions of the Jobs and Tax Cuts Act of 2017 expire next year.”
Biden’s budget proposal specifically calls for a 25 percent minimum tax rate on “the wealthiest 0.01 percent” of Americans. It also seeks to restore the top income tax rate of 39.6 percent for Americans making more than $400,000 a year.
The president also proposed raising the corporate tax rate to 28 percent, emphasizing that this is “still well below the 35 percent rate that prevailed prior to the 2017 tax law.”
The proposal would also raise the corporate minimum alternative tax, which was enacted as part of the Inflation Reduction Act IRA to target billion-dollar corporations that manage to avoid paying their full tax bill, to 21 percent from 15 percent.
This isn’t the first budget proposal where the Biden administration has floated similar tax hikes for the wealthy, including in years when Democrats controlled Congress. However, most of those proposals never became law.
“Companies and very rich individuals — their taxation is not the same [as others’]. That’s one of the key things the Biden budget is seeking to address,” Bobby Kogan, a former Biden Office of Management and Budget (OMB) official and now director of budget policy at the Center for American Progress, told The Hill.
But the Republican chair of the House Ways and Means Committee, Rep. Jason Smith (R-Mo.), blasted Biden’s new budget proposal as “the largest tax increase in the history of our country.”
“Almost $5 trillion in new taxes, and that’s not even counting his proposal that he wants all of the 2017 Trump tax cuts to expire, as well,” Smith told Newsmax on Monday.
“This is the wrong recipe for America,” he added. “I would love to have a revamped tax code that is simpler, flatter, and fair. That’s exactly what we’re going to strive for in 2025, when we’re seeing all these Trump tax cuts that are expiring, and hopefully, we’ll be able to move in that direction.”
The Hill’s Julia Shapero and Tobias Burns have more here.
