President Biden is set to lay out vast and expensive ambitions in his 2024 budget Thursday from shoring up Medicare and boosting domestic spending to reducing the deficit by nearly $3 trillion over the coming decade.
To pay for it all, he plans to propose a slate of tax increases, according to multiple peeks at the budget administration officials gave in recent days.
There are new taxes on the business world focused on raising the rate on corporate income and on stock buybacks. He will also propose new taxes on wealthy Americans — from changes to how investment income is taxed to a revival of his “billionaire minimum tax” on wealth.
“I want to make it clear I’m going to raise some taxes,” President Biden said during a recent stop in Virginia, offering one of his many previews of what’s to come.
Of course, presidential budget proposals are largely symbolic documents that are more about staking out a position rather than being enacted. But they serve as an important marker of Biden’s priorities for the year ahead.
“What the president has really here to use is the bully pulpit, meaning once he puts his budget forward, is he going to continue to push some of those ideas?” asked Committee for a Responsible Federal Budget President Maya MacGuineas in a Yahoo Finance Live interview on Wednesday. “If he’s serious about it, he’ll push it.”
Here are some of the new taxes set to be unveiled on Thursday
New taxes on Corporate America
In his budget, President Biden is set to renew his long-standing calls for more taxes on Corporate America.
Included in a New York Times preview of the budget document is Biden’s desire to raise the corporate income tax rate to 28% from its current level of 21%.
The president is also set to renew his call to quadruple the recently enacted excise tax on stock buybacks, a change he first offered earlier this year during his State of the Union address. On Jan. 1, a new 1% tax on share repurchases went into effect, but has done little to damp business enthusiasm for the practice. The provision is currently set to bring in about $74 billion over the coming decade, and Biden is proposing to increase the rate to 4%.
And according to a document reviewed by Reuters, the budget will also propose scrapping tax breaks that oil and gas companies receive. That could likely open up another front in the back and forth between the White House and oil companies over record profits they’ve enjoyed since the Russian invasion of Ukraine.
The new proposals come after last year’s Inflation Reduction Act imposed multiple new taxes on businesses, including the 1% stock buyback excise tax and a new corporate book minimum tax.
Going after more taxes so shortly after last year’s victory likely will inflame critics. Erica York, a senior economist at the Tax Foundation, argued in an interview Wednesday with Yahoo Finance that Biden’s policies were already “heading in the wrong direction and the president’s budget is going to double down on that.”
“I would say wait and see how it plays out before you double down or quadruple down on it,” she added.
New taxes on wealthy individuals
Biden is also set to propose new taxes on Americans making over $400,000 a year.
The president rolled out his most controversial proposal during this year’s State of the Union with a potential new tax that would target wealth, not just income.
“We have to reward work, not just wealth,” President Biden said in his speech. “No billionaire should be paying a lower tax rate than a school teacher or a firefighter.”
According to a preview offered to Bloomberg, the president will lay out new details on that, including a call for a 25% minimum tax on households worth more than $100 million as well as an increase in the capital gains rate for wealthy Americans.
Other tax ideas that were present in previous budgets are set to be revived for 2024, including ending the so-called carried-interest loophole and eliminating some tax breaks around real-estate profits.
All told, the various increases would fund nearly $3 trillion in deficit reduction over the next decade and also fund other Biden priorities.
The deficit reduction will come in a budget that “achieves this while lowering costs for families, investing in America, and protecting programs Americans have paid into because it proposes tax reforms to ensure the wealthy and large corporations pay their fair share, while cutting wasteful spending on special interests — interests like Big Oil and Big Pharma,” Press Secretary Karine Jean-Pierre told reporters on Wednesday.
New taxes to shore up Medicare
Finally, the White House previewed new taxes to shore up the Medicare program earlier this week.
Biden will propose increases on payroll taxes on Americans making over $400,000 per year; closing loopholes that shields some “pass-through” income from Medicare taxes; and allowing Medicare to negotiate on a wider array of prescription drugs.
Those provisions, which Biden reviewed in a New York Times op-ed on Tuesday, would extend the program through 2050.
Critics have noted that many of these proposals would be untested ways to fund the health care program for retirees. York also noted that some of the rule changes around the net investment income tax would help Medicare’s finances by diverting some money from the government’s general fund.
“Of course that looks like you’re strengthening Medicare, but you’re creating a hole in the budget elsewhere,” she said, noting the plan also increases the net investment income tax from 3.8% to 5% and would therefore also bring in more money overall.
Republicans have been promising for weeks that Biden’s proposals won’t see the light of day. This is hardly new — there’s an old saying in Washington about budgets that “the president proposes and Congress disposes” — but it will nevertheless increase pressure on House Speaker Kevin McCarthy (R-CA) to offer his own proposal in the coming months.
MacGuineas, who previewed the dueling proposals, noted that the White House budget will likely focus on tax increases and the GOP plan will revolve around spending cuts.
“Neither of them is realistic, and, frankly, neither of them is the right policy,” she said. “We need compromises on both.”
Ben Werschkul is Washington correspondent for Yahoo Finance.
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