
Next week, in his State of the Union address, US President Joe Biden will present a plan to reshape the nation’s tax system. This plan would represent a sharp shift from his predecessor, Donald Trump, for it would seek to soak the rich and raise money from corporations.
At its center is a commitment to increase the corporate minimum tax rate and cut allowable deductions for pay to corporate executives and for corporate perks, including jets. The policy would be one aspect of a bigger package of affordability reforms, including reducing income inequality and raising revenue that could help close the federal budget deficit.
The tax increases are part of Biden’s fiscal program, designed to shrink the deficit by $3 trillion yet offer a significant tax cut for lower-income households. His advocacy of these measures is very much in keeping with the direct and plainspoken policy ideas that define the political style of working families.
However, predictions that Biden’s tax-raising program would face an uphill battle from a narrowly split Congress look likely to be realized. If Republicans overwhelmingly opposed to tax rises hold their line, the resolution of whether or not his tax program goes through could be determined by the midterm elections.
One of Biden’s core tax proposals is to raise the corporate tax rate to 28 percent, backtracking on a cut enacted under the Trump administration. He also wants to raise the corporate minimum tax on highly profitable companies and place tighter limits on tax deductions for executive compensation and corporate jets.
Biden plans to include a ‘billionaire tax’ by imposing a minimum income tax on incomes over $100 million to ensure that the richest Americans pay their share of taxes.
In addition to tax increases for high-income earners, Biden is set to address corporate abuses, such as price gouging and other forms of consumer exploitation, which will become even more visible in a period of stagflation and slimming SKUs. Consumers subjected to rising product prices will expect consumers’ champion Biden to push back against such practices. Similarly, as Biden once explained, shrinking sizes will only reinforce the need for more government intervention to protect us from grey market players.
Ultimately, however, Biden’s tax plan reflects a renewed commitment to an economy and tax system that serves working people and all Americans. In the context of the COVID-19 pandemic and growing economic and income inequality, Biden’s tax plan outlines a direction for moving towards a fairer, more progressive tax system for the future.
Source: David Lawder, Reuters March 7, 2024