Nathan Howard
President Joe Biden laid out on Monday a budget proposal that calls for sweeping tax hikes on large businesses and the rich, as a great deal of former President Donald Trump’s 2017 tax cuts is set to expire at the end of next year.
In all, Biden’s government funding plan for fiscal year 2025 amounts to $7.3T in spending proposals, up from $6.9T in 2024. The budget is expected to reduce the federal deficit by roughly $3T over the next 10 years “by making the wealthy and large corporations pay their fair share, closing tax loopholes, cutting wasteful spending on Big Pharma, Big Oil, and other special interests, and following the Fiscal Responsibility Act,” the White House said in a release.
Specifically, under the budget proposal, the capital-gains tax would be increased to equalize the wage income tax, meaning capital gains for those earning at least $1M would be taxed at a 39.6% base rate, up from 20%.
Medicare tax would also be increased to 5% from 3.8% for those earning at least $400K, in an effort to shore up the government’s Medicare and Social Security programs. The wealthiest taxpayers, in turn, would have to pay a 44.6% federal rate on investment income and other income.
The plan also calls for a 25% minimum tax rate on households worth at least $100M, compared with the current 8% rate on their incomes. The top personal-income tax rate would be increased to 39.6% from 37% for people raking in over $400K, reversing a cut that Trump has signed into law.
On corporate taxes, the tax rate on billion-dollar firms would rise to 21% from 15% and the wider corporate tax rate would be hiked to 28%, the Biden administration said. What’s more, the taxes U.S. firms must pay on their foreign earnings would be doubled to 21% from 10.5%, again rolling back Trump’s tax law.
Biden’s plan would also increase the tax rate on stock buybacks to 4% from 1%. That rate was added to the U.S. tax code in Biden’s Inflation Reduction Act.
And, expanding a provision in Trump’s law that prohibited tax breaks for certain executives’ salaries, the plan would deny corporate tax breaks for compensation paid to any staffer that surpasses $1M.
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