President Biden’s $6.8 trillion budget proposal would impose a whopping $5.5 trillion in tax increases and push federal spending roughly 55% higher than pre-pandemic levels, including a 15% boost for the IRS that would be added to the agency’s current massive funding increase.
Mr. Biden announced the tax hikes Thursday in his annual budget proposal for fiscal 2024, which the White House says would reduce the federal deficit by more than $3 trillion over the next decade.
The budget proposes a slew of tax hikes and new taxes on individuals and businesses:
• Raising the corporate tax rate from 21% to 28%, a move projected to add $1.3 trillion to the Treasury.
• Doubling the capital gains tax rate from 20% to 39.6% for incomes of more than $1 million, raising an extra $449 billion.
• Hiking the top income tax rate for Americans making more than $400,000 from 37% to 39.6%, about $640 billion.
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• Imposing a 25% minimum tax on individuals with income and assets totaling more than $100 million, adding $1.7 trillion in revenue.
• Raising the tax rate on the foreign earnings of U.S. companies from 10.5% to 21%, adding $549 billion to the Treasury.
• Increasing the Medicare surtax on those making more than $400,000 from 3.8% to 5.0%, for $650 billion.
• Increasing from 1% to 4% the surcharge on corporate stock buybacks, for $74 billion.
“No billionaire should be paying a lower tax than someone working as a schoolteacher or firefighter,” Mr. Biden said in Philadelphia as he announced the spending plan. “My plan is to make sure corporations pay their fair share.”
Mr. Biden reiterated his campaign promise not to raise taxes on anyone earning less than $400,000 a year.
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“I’m not going after ordinary folks because they are paying their share,” he said.
In addition to one of the biggest proposed tax increases in history, Mr. Biden’s budget also seeks to end incentives and subsidies for special interests. The president specifically calls for ending $31 billion in tax subsidies for oil and gas companies and $19 billion for the real estate sector.
To help collect all those extra taxes, he would increase the IRS budget again to help crack down on tax cheats and administer the White House climate change legislation. That’s on top of the $80 billion funding increase over 10 years for the IRS that Congress approved late last year.
Mr. Biden is requesting an additional $1.8 billion for the agency in 2024, boosting the agency’s overall funding to $14.1 billion — a 15% increase from the more than $12 billion approved for the agency in December.
House Republicans say boosting IRS spending is a non-starter. Speaker Kevin McCarthy said the entire budget proposal was “unserious” and could not muster support within the Republican-controlled House.
Republican lawmakers said the budget was nothing more than a messaging document from a president seeking reelection in 2024.
“Joe Biden’s budget proposal will be as popular with the House GOP as Pete Buttigieg is with the people of East Palestine, Ohio,” said Rep. Ben Cline, a Virginia Republican who serves on the House Appropriations Committee.
Other Republicans said the plan shows how little Mr. Biden understands about families and businesses struggling under high inflation and declining real wages.
“A record number of Americans are behind on credit card payments, the country is on the edge of a recession and groceries are unaffordable because of inflation,” said Sen. Tommy Tuberville, Alabama Republican. “Meanwhile, Joe Biden wants to raise taxes. How out of touch can a president be?”
Sen. Mike Braun, Indiana Republican, called the president’s budget “dead on arrival.”
“It’s a campaign wishlist of tax hikes and fuzzy math that would do nothing to help Hoosiers struggling with Biden’s inflation crisis,” Mr. Braun said.
Grover Norquist, president of Americans for Tax Reform, said Mr. Biden’s tax increases “will hit small and medium-sized businesses hard.”
“The Biden tax hikes will raise the cost of goods and services for everyone, and make American workers and businesses less competitive internationally and vs. China,” he said.
Democrats said Mr. Biden wants to bring fairness to the tax system.
“With an increase in taxes on big corporations, President Biden is proposing a plan that rewards work, not wealth,” said Rep. Rosa DeLauro, Connecticut Democrat and ranking member of the House Appropriations Committee.
The White House’s 2024 budget includes $290 million to modernize the tax processing infrastructure at the IRS. Senate Republicans forced Mr. Biden to strip that money from last year’s government funding bill.
Mr. Biden’s budget also would devote an additional $642 million to improve the “taxpayer experience and expand customer service outreach to underserved communities.”
Most of the additional spending would go toward implementing the White House’s $739 billion Inflation Reduction Act.
While the legislation boosted IRS funding by nearly $80 billion over the next decade, it created nearly $300 billion in new tax incentives for green energy initiatives. Administration officials say the IRS needs to expand its staff to help companies take proper advantage of the new subsidies without causing issues in the agency’s other departments.
Among the other proposals is the removal of special tax incentives that allow cryptocurrency owners to write off sales of digital assets at a loss.