Topline
President Joe Biden proposed tax hikes in his budget Thursday that could reduce the deficit by $3 trillion over the next decade, according to the White House, with tax increases for billionaires, Medicare and stock buybacks, though Republicans say the proposals will not make it through Congress.
President Joe Biden unveiled his 2024 budget proposal Thursday.
Key Facts
The fiscal year 2024 budget proposal suggested increasing the 1% stock buyback tax—initially included in the Inflation Reduction Act last year—to 4%.
The budget increases Medicare surtaxes from 3.8% to 5% for those who make more than $400,000 a year, fortifying a fund that was projected to run out of money by 2028.
A long-discussed “billionaires tax” that’s been previously rejected in Congress was also proposed, which would establish a minimum 25% rate—compared to the 8% rate those earners currently pay—for households earning more than $100 million.
The budget proposes raising the tax rate on U.S. multinational foreign earnings from 10.5% to 21%, which the Biden Administration says “will ensure that profitable multinational corporations pay their fair share.”
A “like-kind exchange loophole”—allowing investors to swap one investment property for another—will also be closed, preventing cryptocurrency investors from taking a tax-deductible loss before buying back into the same investment—a process the Wall Street Journal estimates could raise $24 billion.
An increase to the top tax rate for Americans earning more than $400,000 from 37% to 39.6% was proposed, additionally increasing the corporate tax rate from 21% to 28%.
Contra
The budget is not expected to make its way through Congress, according to Senate Republican leader Mitch McConnell. McConnell noted that because Republicans hold a House majority, the budget “will not see the light of day,” according to Reuters.
Tangent
The budget proposal also calls for tax cuts for families with children while expanding on the Child Tax Credit introduced in 2021. Families would receive $3,000 in credit for each child over six years old and up to $3,600 for each child under six, up from $2,000. Other proposals include universal free preschool, national paid family and medical leave programs and a process to make colleges more affordable, in addition to permanently enhancing Obamacare subsidies.
Key Background
A budget proposal must be approved by Congress before the end of the federal fiscal year in September. Lawmakers previously approved a temporary extension of the current fiscal year budget in December in an effort to prevent a government shutdown. Biden then signed into law a $1.7 trillion budget the federal government is currently operating under, which included a 10% increase in defense spending and a 6% increase in all other types of spending. Biden had outlined some proposals for his 2024 budget proposal during his State of the Union address in February, including calls to increase taxes for billionaires and for stock buybacks.
Further Reading
Biden Proposes Taxing Higher Income Earners To Help Save Medicare (Forbes)
Source: https://www.forbes.com/sites/tylerroush/2023/03/09/billionaires-buybacks-and-medicare-how-bidens-2024-budget-outlines-trillions-of-dollars-in-proposed-new-taxes/