Biden will propose tax increases for billionaires – 03/07/2024 – Market

The Biden administration will target billionaires and big companies with tax increases as part of a plan to reduce the United States’ public debt and boost the president in the polls ahead of the November elections.

The proposals, which are expected to be revealed in this Thursday’s State of the Union address and throughout the following week, include an increase in the minimum corporate tax from 15% to 21%, as well as a 25% minimum corporate tax. billionaires.

The plans are intended to reduce US public debt by $3 trillion over the next decade. According to the Congressional Budget Office, an independent fiscal body, the country’s debt had reached $26.2 trillion at the end of 2023.

The proposals, which are unlikely to be approved by Congress, are intended to distinguish Biden’s agenda from that of his Republican rival Donald Trump. They come in the wake of polls showing that the majority of voters are not convinced by the economy’s performance under the president.

According to an FT-Michigan Ross poll conducted last month, 60% say they disapprove of Biden’s handling of the economy, while 49% say the financial situation has worsened since he took office.

Biden’s annual State of the Union address marks a critical opportunity for the 81-year-old president to convince skeptical voters that he is fit to govern for a second term.

Concerns about the president’s frailty were reinforced by a recent report from the special counsel investigating Biden’s handling of classified documents, which described the president as a “well-intentioned elderly man with a bad memory.”

A major Democratic donor, who co-hosted a fundraiser for the president last year, told the Financial Times that Biden should “step down” in favor of a next generation of leaders.

“I’m worried he won’t win,” the donor said. “Our democracy is at stake. And there’s a lot at stake here for Democrats.”

Biden’s proposal to raise the minimum corporate tax comes as 58% of voters surveyed say large companies are taking advantage of high inflation to raise prices, versus 36% who blame Democratic policies for rising living costs.

Economists have become increasingly concerned about the fiscal plans of both Democrats and Republicans.

The Congressional Budget Office has warned that public debt held is expected to rise from 99% of GDP at the end of 2024 to 116% of GDP by the end of 2034. This would mark the highest level on record.

Biden has proposed introducing a tax on billionaires several times in recent years. However, the new minimum corporate tax would mark an increase from the 15% that was implemented in 2022 as part of the Inflation Reduction Act (IRA).

Biden has also said in the past that he would raise the top corporate tax rate from 21% to 28%.

The president’s legislative agenda has been largely stalled in Congress since the 2022 midterm elections, when Republicans regained control of the House.

As part of the new proposals, the government also plans to deny companies tax deductions for employees earning more than $1 million a year. This would raise more than $250 billion, according to senior government officials.

In contrast to Biden’s revenue plans, Trump is expected to propose making permanent tax cuts introduced during his first term, set to expire in 2025.

These cuts included a reduction in the benchmark corporate rate from 35% to 21%, a move that brought the US in line with the average for advanced economy countries.

The OECD has proposed a global agreement to raise the lowest global corporate tax rate to 15%, but many countries have not yet ratified the plan.