Billionaire, Corporate Tax Hikes Will Be Focus of State of the Union
The proposals serve important political purposes.
Biden is able to bank the hypothetical revenue in his annual budget proposal, to be released on Monday, reducing the projected impact on the deficit. His budget proposal estimates reducing the deficit by $3 trillion over 10 years, according to the officials.
The proposals also help frame both the upcoming campaign and the future debate over taxes.
Because large swaths of Trump’s 2017 tax cuts are set to expire at the end of 2025, lawmakers are incentivized to strike a deal. Failure to do so would mean that nearly every household would see their taxes increase.
But targeting corporate taxes remains politically popular. More than two-thirds of Americans think that corporations pay too little in taxes, according to Gallup.
“While the president wants to cut taxes for working families, congressional Republicans want to cut taxes even more for the wealthy and big corporations,” White House economist Lael Brainard told reporters. “President Biden has made clear whose side he’s on.”
Trump Cuts
If Biden wins a second term, he will face intense pressure to keep some of his predecessor’s tax cuts in place, including lower rates for middle-income households, a bigger child tax credit and changes that made it easier for many Americans to file with the Internal Revenue Service. That means key portions of Trump’s tax cut could live on even without Trump.
Yet if Democrats control both Congress and the White House, they’re likely to use Biden’s proposals as a starting point for negotiations. And Biden, if he wins reelection, will have one key advantage he didn’t have when Democrats last had full control of Washington.
He won’t have to contend with Senator Joe Manchin of West Virginia, a moderate Democrat, and Senator Kyrsten Sinema of Arizona, a Democrat-turned-independent, who blocked many of his proposed tax changes. Both do not plan to run for reelection.
If Democrats and Republicans split power in Washington after the election, it’s likely that most of the Trump-era cuts will stay intact, with some small changes subject to bipartisan approval.
Trump has pledged the “biggest tax cuts” if he is elected, though he has privately told allies he prefers to keep the corporate tax rate at 21%, instead of lowering it to 15%, a rate he pushed in office which generated opposition from both parties.
(Credit: White House)
Copyright 2024 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
