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Biden budget calls for $5T in tax increases

BY: BRIAN FALER | 03/11/2024 02:45 PM EDT

President Joe Biden called for nearly $5 trillion in tax increases on big corporations and well-to-do individuals in the budget he released Monday.

Most of the proposals were recycled from previous years and are unlikely to become law anytime soon. For now, they’re largely intended to highlight for voters the differing priorities between Biden and former President Donald Trump ahead of the November elections.

At the same time, though, the plan doesn’t provide much detail on how the administration would approach the biggest tax issue that will face the winner: what to do about the looming expiration of Republicans’ 2017 tax cuts.

Biden’s plan calls for extending breaks for people making less than $400,000 and covering the cost to the federal treasury, but offers few details on how. (The dozens of tax increases in the budget are earmarked for either deficit reduction or offsetting the cost of other proposals.)

The budget also calls for temporarily expanding the Child Tax Credit along the lines of what Democrats pushed through during the pandemic, but doesn’t explain what the administration would do with it beyond the end of 2025, when large chunks of the Tax Cuts and Jobs Act will expire.

“We’re going to have a robust tax debate at the end of 2025,” said OMB Director Shalanda Young.

Among the new tax increase proposals, already previewed by the administration alongside last week’s State of the Union address, is a plan to hike to 21 percent, from 15 percent, a minimum tax on the largest corporations that Democrats pushed into law in 2022. That’s anticipated to raise $137 billion over a decade.

The budget also calls for expanding restrictions on companies’ ability to deduct the cost of compensating its most well-paid employers, something that’s projected to bring in $272 billion. Quadrupling a stock buyback tax to 4 percent would produce $166 billion.

Most of the other tax increases are being revived from past years, such as a special 25 percent tax on the roughly 20,000 households that have at least $100 million in wealth.

The administration also wants $765 billion in tax benefits, mostly in the form of expanding the child credit and the Earned Income Tax Credit.

There’s also a pair of new proposals aimed at making housing more affordable. One would offer first-time homebuyers a “Mortgage Relief Credit” worth up to $10,000 over two years, something that would cost the Treasury $31 billion.

To help prompt more homeowners to put their houses on the market, it would offer a $10,000 tax credit to those selling a starter home, deemed to be those costing at or below the median price in an area, at a total cost of $16 billion to the federal government.

“Increased interest rates following the pandemic have made it more difficult to become a homeowner for the first time, partially because current homeowners are more reluctant to sell a home on which they have a low-interest mortgage,” the administration’s “Greenbook” says.

It would also extend, at a cost of $1.7 billion, a temporary provision pushed through by Democrats that waives tax bills when people have their student loans forgiven by the government — something the IRS normally considers tantamount to taxable income.

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