President Joe Biden on Thursday called for ending tax subsidies for cryptocurrency investors, the real estate industry and the oil and gas sector, as he formally rolled out his proposed budget for the 2024 fiscal year.
Biden is aiming for “cutting wasteful spending on Big Pharma, Big Oil and other special interests,” said Shalanda Young, director of the president’s Office of Management and Budget, during a call with reporters.
His proposed budget would deliver an estimated $24 billion in savings by eliminating a tax subsidy for crypto investors that allows them to sell a cryptocurrency such as bitcoin
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at a loss and take a tax loss to reduce their tax burden, but then buy back that same asset the next day, according to the White House.
See: Cryptocurrency investor losses are being turned into IRS gains, as there’s no wash sale rule
The budget would provide savings of $19 billion by closing a “like-kind exchange” loophole for real estate
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investors, which lets them put off paying taxes on profits from deals indefinitely as long as they keep investing in real estate.
It would get $31 billion in savings by eliminating special tax treatment for oil and gas
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company investments, as well as other fossil fuel tax preferences, the White House said.
Many of the president’s budget proposals aren’t expected to find much traction in the Republican-run House of Representatives, but they could help provide the Democratic incumbent with talking points in a 2024 re-election campaign.
In addition, Biden’s proposals — which discussed in a speech delivered Thursday in the swing state of Pennsylvania — are likely to factor into his discussions with House Republicans over raising the U.S. debt limit.
The president would increase spending on things like the Social Security Administration, which would see a rise of $1.4 billion over the 2023 enacted level to fund spending on staff and IT or other improvements. Schools in low-income communities would get a $2.2 billion increase, and the Advanced Research Projects Agency for Health (ARPA-H) would score an increase of $1 billion.
The proposed budget has overall outlays totaling $6.88 trillion, up from an estimated $6.37 trillion in spending for the current fiscal year. There would be $5.04 trillion in revenue, resulting in a deficit of $1.85 trillion.
Biden’s budget takes aim at the pharmaceuticals industry
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in part by aiming to build on the Inflation Reduction Act’s move to allow Medicare to negotiate prices for some drugs. It calls for letting the program negotiate prices for more drugs and bringing drugs into negotiation sooner after they launch.
His budget targets wealthier Americans’ retirement investments, as it proposes limiting the amount that those making over $400,000 a year can hold in tax-favored retirement accounts, in a move that would deliver estimated savings of $23 billion.
It calls for ending the carried-interest loophole, which allows managers of private-equity funds to pay lower tax rates, even as Biden’s push on that issue flopped last year when Democrats had slim majorities in both chambers of Congress.
It features fresh attempts by Biden to raise taxes on U.S. companies, as it proposes hiking the corporate tax rate to 28% from 21%, lifting the tax rate on foreign earnings to 21% from 10.5%, and quadrupling the 1% levy on stock buybacks.
Biden vs. McCarthy
Biden and other Democrats have been calling for House Speaker Kevin McCarthy and his fellow Republicans to lay out their own proposed budget, and the president reiterated that point on Thursday, as he spoke at a union hall in Philadelphia.
“I’m ready to meet with the speaker any time — tomorrow, if he has his budget. Lay it down. Tell me what you want to do. I’ll show you what I want to do. We’ll see what we can agree on, and what we don’t agree on,” Biden said.
McCarthy reportedly has said it could be two months before they have one. The speaker told reporters on Wednesday that the GOP would analyze Biden’s proposal and get to work on their own.
McCarthy and his fellow Republicans have been demanding spending cuts in exchange for lifting the ceiling on federal borrowing, while Biden and his fellow Democrats have said it should be raised without conditions.
Related: CBO warns of potential for U.S. default between July and September, as debt-limit standoff persists
Congressional Republicans blasted Biden’s budget on Thursday for what they said would be a burden on families through taxes or higher costs, and challenged the president to cut spending ahead of high-stakes talks over the debt limit.
“We must cut wasteful government spending,” said McCarthy, a California Republican, and three other House GOP leaders, in a statement.
“Our debt is one of the greatest threats to America, and the time to address this crisis is now.”
Other tax proposals
Another part of Biden’s budget is a proposal to bolster Medicare by raising the Medicare tax rate on earned and investment income to 5% from 3.8% for people making more than $400,000 a year.
There are also other proposed measures that would raise taxes on the wealthy, such as a billionaire minimum tax.
The budget would cut the deficit by almost $3 trillion over 10 years, according to the White House.
MarketWatch’s Robert Schroeder contributed to this report.
Source: https://www.marketwatch.com/story/biden-targets-crypto-real-estate-and-oil-industries-as-he-unveils-his-budget-353bb86c?siteid=yhoof2&yptr=yahoo