President Biden’s $6.8 trillion budget proposal calls for nearly $5 trillion in tax increases on the wealthy and large corporations to help offset the federal deficit and to shore up Medicare costs.
The release of the 2024 fiscal blueprint signals the start of intense budget negotiations between members of Congress as the federal government faces hitting its debt limit by July and risks defaulting on its debts if lawmakers can’t reach agreement. House Republicans want at least a $3 trillion reduction in federal spending as a requirement for raising the current debt ceiling.
As with many other Administrations’ budget proposals, the President’s budget request holds little likelihood of adoption by Congress with a Republican controlled House.
House Speaker Kevin McCarthy, Republican of California, tweeted that Biden’s budget was “completely unserious,” adding that “He proposes trillions in new taxes that you and your family will pay directly or through higher costs.”
House Budget Committee Chairman Jodey Arrington, Republican of Texas, called the President’s budget plan “dead on arrival.” In a statement, Arrington said “Biden’s latest budget is more of the same bloated bureaucracy at the expense of working families, while sticking our grandchildren with the bill.” Arrington told reporters the House would most likely produce its own FY 2024 budget proposal sometime in May.
The Biden Administration is calling for a minimum 25% tax on the wealthiest 0.01% of people, and a top marginal income tax rate of 39.6%, up from 37%, for single filers making more than $400,000 and married couples with income above $450,000 per year. The budget proposal includes an expanded child tax credit from $2,000 to $3,000 per child over 6 years old, and to $3,600 for children under age 6. It also calls on Congress to make the Earned Income Tax Credit expansion for childless workers permanent.
The Administration also calls for raising the capital gains tax from 20% to 39.6% and makes reforms to the international tax system. The budget would reduce incentives for multinational businesses to realize profits in low-tax jurisdictions and raise the tax rate on their foreign earnings to 21% from 10.5%. And it would hike the stock buybacks tax enacted last year to 4%, from 1%.
It also proposes taxing capital gains at the same rate as wage income for those earning more than $1 million, as well as closing the carried interest loophole that allows investment managers to treat much of their compensation as capital gains, thereby reducing their tax liability.
In addition, the White House budgeted $14.1 billion for the IRS, the same as its fiscal year 2022 request with $642 million more for improving taxpayer services and $290 million for business systems modernization at the IRS.
“My 2024 budget is a blue-collar blueprint to rebuild America in a fiscally responsible way that leaves no one behind” said Biden. “The budget continues lowering costs for families—with new measures to expand health coverage, cap prescription drug costs, invest in quality childcare, build affordable housing, reduce home energy bills, make college more affordable and more.”
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