President Biden is preparing to present a budget plan that will introduce a range of tax increases targeting wealthy individuals and corporations.
He argues that the proposed changes will help to reduce the deficit by $2 trillion over the next decade. However, the move is likely to face resistance from Republicans on Capitol Hill.
The backstory: During his recent State of the Union address, Biden informed lawmakers that his budget would decrease the deficit and extend the solvency of the Medicare Trust Fund “by making the wealthy and big corporations begin to pay their fair share.”
- The White House has now revealed its proposal to raise the Medicare surtax on income above $400,000 from 3.8 percent to 5 percent.
- In addition, Biden has also suggested a new tax on wealthy households. This would require individuals and families worth more than $100 million to pay a 20 percent tax on income and unrealized gains from liquid assets such as stocks.
- Biden is also expected to propose increasing 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 proposed tax hikes will likely face significant opposition in the Republican-controlled House, but they could serve as a starting point for negotiations with Speaker Kevin McCarthy to raise the debt limit.
What they’re saying: Republicans have already signaled their opposition to Biden’s proposed tax increases. Senate Republican Leader Mitch McConnell has dismissed the president’s plans as “massive tax increases” that will not be approved.
- “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 GOP Leader Mitch McConnell (R–Ky.) told reporters.
- Senate Majority Leader Chuck Schumer has praised Biden’s budget plan, calling on House Republicans to introduce their own deficit reduction plan. He argues that Biden’s proposals will lower the deficit by making “billionaires and big corporations pay their own share.” Schumer is urging Speaker McCarthy to present his own plan to address the debt ceiling.