Biden aims to implement tax increases on the wealthy that have been elusive thus far
President Joe Biden is pushing for tax increases on the wealthy and corporations, a plan that has faced challenges in implementation. During a visit to Pennsylvania, he contrasts his tax policy vision with former President Donald Trump’s, emphasizing economic fairness. Biden’s proposals include raising corporate taxes, implementing a 25% minimum tax for billionaires, and increasing capital gains taxes for high earners.
President Joe Biden is campaigning on tax hikes on the wealthy and corporations of the kind that he has mostly failed to implement thus far.
Biden will make stops on Tuesday in his home state of Pennsylvania, where he will use the opportunity to contrast his tax policy vision with that of his opponent, former President Donald Trump. Biden has advocated higher taxes, although he has said his proposals wouldn’t raise taxes for anyone earning less than $400,000 annually.
“Starting tomorrow in Scranton, the day after Tax Day, the president will outline how Trump’s tax plan is a handout to the rich and leaves the middle class holding the bag,” Biden campaign communications director Michael Tyler said on a call with reporters ahead of the trip.
Some of Biden’s biggest tax proposals have failed, thanks to opposition from Republicans and members of his own party. Here is a look at the tax policies Biden has pushed for and those that have made it through.
What has been proposed
Biden’s tax proposals have been a wish list for Democrats. He has pushed to raise the corporate tax rate, which was lowered from 35% to 21% by Trump as part of the 2017 Tax Cuts and Jobs Act.
Biden has repeatedly said he wants to hike the headline corporate tax rate from 21% to 28%, the most recent push coming as part of his 2025 budget proposal.
Raising the corporate tax rate to 28% would raise some $1.35 trillion over the next decade, according to the administration’s latest budget projections.
Biden’s budget is flush with tax proposals that have no chance of passing in an election year in which Republicans control the House. If passed as proposed, the plan would significantly raise taxes from roughly 18% of GDP to over 20%.
The president has also proposed a 25% minimum tax for billionaires. That provision would only affect the wealthiest 0.01% of taxpayers, according to the White House, and would raise about $500 billion in revenue over the next decade.
Among other tax hikes on the wealthy, Biden has proposed raising the capital gains tax on wealthy people, for those earning over $1 million, from 20% to 39.6%.
Biden has proposed hiking the top marginal tax rate on people making over $400,000 per year to 39.6% — the rate it was before the 2017 tax cuts, up from the current 37% rate. The latest proposal is that it would also apply to married couples making more than $450,000 per year.
Biden also wants to eliminate the step-up in basis at death for capital gains above $5 million per person or $10 million per couple, although the White House said there would be protections that would make it so family-run businesses and farms would not have to pay taxes if given to heirs who continue to run the business.
Step-up in basis permits inherited assets to be taxed at the appreciated value of when they were inherited instead of the basis value of when they were first bought. It can allow the appreciation of an asset during a decedent’s life to go untaxed, although the estate tax may apply.
What Biden has gotten passed
Biden does have some smaller wins to point to in implementing his tax agenda.
He was able to use the partisan 2022 Inflation Reduction Act to push through some changes to the tax code.
For instance, the legislation included a 15% minimum tax on billion-dollar corporations. The minimum attempts to make it so that some corporations that pay nothing in federal taxes through legal maneuvers are forced to pay at least 15%.
Building off the success in getting the 15% minimum tax passed, as part of his most recent budget, Biden proposed raising that minimum to 21%. The White House claimed that hiking it would ensure the country’s biggest corporations “pay more of their fair share.”
“These policies are complemented by other proposals to incentivize job creation and investment in the United States to help ensure broadly shared prosperity,” the White House said.
Biden was also able to secure a 1% excise tax on corporate stock buybacks as part of the Inflation Reduction Act.
Stock buybacks, when corporations believe their shares are undervalued and buy up their own company stock to reduce the number of outstanding shares in the market, have become increasingly common over the years.
Proponents see the practice as a good way to grow value for shareholders, but opponents contend that the practice helps the company’s wealthiest employees make money instead of using it in ways that could help expand the business, such as hiring more workers.
In his latest budget, Biden proposed expanding that provision by quadrupling the tax to 4% “to address the continued tax advantage for buybacks and encourage corporations to invest in productivity and the broader economy.”
While this is not an explicit tax hike, Biden also was able to secure $80 billion in added funding for IRS tax enforcement as part of the Inflation Reduction Act.
Republicans opposed the funding, saying it would drive up audits on the middle class. The White House and Democrats, meanwhile, argued that the funding would be used to close the tax gap by going after wealthy tax cheats and would be focused on those earning in excess of $400,000, offering a significant return on investment.
Republicans have since succeeded in reducing some of the funding.
“If Congress enacted President Biden’s tax plan, tens of millions of workers and families would have their taxes cut, nobody making less than $400,000 would pay a penny more in taxes, and the wealthy and big corporations would finally pay their fair share — which would fully pay for the president’s tax cuts and investment agenda,” the White House said in a news release this week.
Biden’s warning
In speaking around Tax Day and highlighting his tax policy vision, Biden seeks to draw a strong distinction between himself and Republicans, including Trump.
Biden has argued to voters that Trump wants to cut taxes for the wealthiest people, while his tax vision is centered on raising taxes on high earners and corporations.
Much of the 2017 tax cuts are set to expire next year, setting up an opportunity for the party that prevails in this year’s election to remake tax policy. The combination of political and fiscal circumstances will give the party with the upper hand in November a huge opportunity to shape tax policy for years to come — adding further pressure to what will undoubtedly be a hard-fought election.
Republicans will fight to preserve the tax cuts that were part of the landmark 2017 legislation — if the party ends up winning the White House, keeping the House, and winning back the Senate. But if Democrats prevail, there might be monumental tax increases for corporations and high earners on the horizon.
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Biden campaign manager Julie Chavez Rodriguez said the president’s Tuesday speech in Scranton, Pennsylvania, where he was born, looks to play up the differences in tax policy, according to the Hill.
“The speech will drive home a simple question we believe will resonate strongly with the voters who will determine this election: Do you think the tax code should work for rich people or for the middle class? The President has made it clear what he thinks the answer is, and so has Donald Trump,” she said in a memo.
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