State of the Union: Biden to push wealth, company tax ideas

[March 07, 2024]  By David Lawder

WASHINGTON (Reuters) - U.S. President Joe Biden on Thursday will escalate his crusade to push wealthy Americans and large companies to pay more in taxes in his State of the Union address, unveiling proposals to hike the corporate minimum tax and curb deductions for executive pay and corporate jets.

White House officials said Biden would preview the steps that will be part of a proposed fiscal 2025 budget released next week that aims to cut the federal deficit by $3 trillion while cutting taxes for low-income Americans.

The tax plans are expected to form a core part of Biden's re-election campaign, contrasting markedly with presumptive Republican nominee Donald Trump, whose 2017 "Tax Cuts and Jobs Act" slashed taxes on companies and the wealthy.

"Congressional Republicans want to cut taxes even more for the wealthy and big corporations, all while adding more than $3 trillion to the debt," said Lael Brainard, director of the White House's National Economic Council. "President Biden has made clear whose side he's on."

Most of Biden's tax proposals have little chance of enactment unless Democrats win strong majorities in both chambers of Congress in November, a sweep that polls suggest is unlikely.

They include Biden's previous calls to raise the corporate tax rate to 28% from the current 21%, recouping half of Republicans' 2017 cut.

Biden also now wants to increase to 21% a 15% corporate minimum tax on companies reporting over $1 billion in profit that he won as part of 2022 clean energy legislation.

TAX BREAK CURBS

Biden also will call for Congress to approve far stricter limits on business income deductions for executive pay, limiting them to $1 million for any given employee.

Current law already prohibits deductions on compensation for chief executive officers, chief financial officers and other key positions. White House officials said the new proposal would cover all employees paid more than $1 million, and raise over $250 billion in new corporate tax revenue over 10 years.

U.S. President Joe Biden delivers remarks before a meeting of his Competition Council, in the State Dining Room at the White House in Washington, U.S., March 5, 2024. REUTERS/Evelyn Hockstein/File Photo

Biden will also go after business income deductions for the use of corporate jets, an area already targeted for audits by the Internal Revenue Service. This includes extending the depreciation period for corporate jets to seven years, the same as commercial aircraft, from five years currently, reducing annual deductions, an administration official said.

Biden will renew his "billionaire tax" proposal, which is actually significantly below that level. It imposes a 25% minimum tax on income for those Americans with wealth of over $100 million.

The average American worker paid about a 25% tax rate in 2022, the OECD reports; White House research found the wealthiest individuals paid about 8% from 2010 to 2018.

Biden will pledge to extend Trump-era tax cuts for those earning under $400,000, call for restoring a COVID-era expansion of the Child Tax Credit that paid eligible families up to $3,600 a year per child, and increase a tax credit for low-wage workers.

FIGHTING "RIP-OFFS"

As consumers continue to struggle with high prices, Biden also will outline steps that his administration is taking to cut "corporate rip-offs" including added "junk" fees, price gouging and reduced package sizes to hide price hikes. So-called "shrinkflation" was bemoaned on Monday by Sesame Street muppet Cookie Monster in a widely reported X social media post.

After a move this week to cap credit card late fees at $8, Biden also will call for crackdowns on "exploitative" practices with branded credit cards, including devaluing air miles and points.

(Reporting by David Lawder; Editing by Heather Timmons and Stephen Coates)

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