President Biden’s top economic adviser said Friday that lawmakers should use next year’s upcoming tax debate to try to reduce budget deficits by sharply raising taxes on corporations and the wealthy.
Under that plan, Mr. Biden would more than offset the cost of maintaining the tax cuts for people making $400,000 or less annually.
In a speech to the Hamilton Project at the Brookings Institution in Washington, Lael Brainard, who heads the White House National Economic Council, gave the most detailed explanation yet of how Mr. Biden would seek to shape a multitrillion-dollar tax debate.
A series of tax cuts signed in 2017 by former President Donald J. Trump, who is running in a rematch against Mr. Biden this fall, are set to expire at the end of next year. It includes cuts for individuals of all income levels. Republicans built this process into the tax code to reduce projected deficit costs and comply with Congressional rules.
Ms. Brainard’s speech reiterated Mr. Biden’s commitment to cutting taxes for middle-class Americans and raising them for high earners. But her comments expressed more concern about growing debts and deficits than the president and his aides had previously shown when discussing the looming tax debate.
“At a minimum, we should avoid widening the budget hole created by the Republican tax cuts by paying in full for any tax cuts that are extended,” Ms. Brainard said in a statement released by the White House. “And we should use the tax debate in 2025 as an opportunity to meet our national needs by increasing overall revenue by asking the rich and large corporations to pay their fair share.”
The comments reflect growing efforts by Democrats and Republicans to set the terms of what is expected to be a major tax debate next year.
Mr. Trump and his allies in Congress have sought to extend all expiring cuts, a move that the nonpartisan Congressional Budget Office said this week could add up to $4.6 trillion to the federal debt over a decade .
Mr. Biden has repeatedly said he wants to extend the individual cuts only for households earning less than $400,000 a year. He would let other cuts expire. The Committee for a Responsible Federal Budget in Washington, a group dedicated to reducing deficits and the country’s growing debt burden, estimates that Mr. Biden’s expansion of these provisions will most likely cost $1.5 trillion to $2.5 trillion over a decade -$, but possibly as much as $4 trillion, depending on which provisions the president wants to extend.
Mr. Biden’s latest budget includes nearly $5 trillion in tax increases on high earners and corporations. This also includes new spending programs worth around $2 trillion.
In her speech, Ms. Brainard reiterated Mr. Biden’s calls for higher taxes on the wealthy and large corporations, including increasing the corporate tax rate to 28 percent. That would be higher than the 21 percent that Mr. Trump’s law, the Tax Cuts and Jobs Act, established, but lower than the 35 percent rate in place before the 2017 tax package was passed.
She also appeared to suggest that Mr. Biden would seek to maintain some limits on tax deductions for households with annual incomes of more than $400,000, including those set to expire at the end of next year. Chief among these could be maintaining a $10,000 per year cap on the amount of state and local taxes that higher earners could deduct from their federal income taxes, a hot topic in higher-tax and predominantly blue states like New York and California.
“Achieving a fairer tax system also means that we cannot extend the expiring TCJA tax relief for individuals earning over $400,000 or reinstate deductions and other tax relief for these households,” she said, referring to the law from 2017. “As the president has said, tax cuts for the rich will expire on his watch.”
Ms. Brainard also called for additional tax help for some low- and middle-income Americans by introducing an expanded child tax credit that Mr. Biden temporarily signed into law in 2021. Poverty rose sharply in the year it was passed, but Democrats have not passed it until Extended 2022 or beyond. She also called for making permanent an expanded tax credit to help people get health insurance under the Affordable Care Act.
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2024-05-10 15:07:50
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