President Joe Biden will ask Congress to raise taxes on corporations during his annual State of the Union address, laying out his tax agenda as the election fast approaches.
Biden will speak before both chambers of Congress and make the case that he should get another term as president. The corporate tax hikes that Biden is expected to propose are largely aspirational, at least for this year, because Republicans hold the House and Democrats hold only a tenuous majority in the Senate.
Specifically, Biden will propose raising the headline corporate tax rate from 21% to 28%, a push he has unsuccessfully made in the past. The 2017 tax cuts, championed by then-President Donald Trump, lowered the corporate rate from 35%.
Biden will also announce during the State of the Union address his intention to raise the corporate minimum tax from 15% to 21%, as well as more stringent limits on corporations’ ability to deduct wages of high-paid employees, according to senior administration officials.
Biden will attempt to draw a contrast between himself and Trump, who is the presumptive Republican nominee this year. Trump and the GOP have touted the 2017 tax overhaul they enacted, which they contend resulted in an economic boom for the corporate world that filtered down to consumers.
Additionally, Biden wants to quadruple the stock buyback tax as well as eliminate a tax break that gives preferential treatment to corporate jets over commercial ones.
The corporate minimum tax and the stock buyback tax are new measures that were enacted in the 2022 Inflation Reduction Act passed by Democrats and signed by Biden.
Biden, though, has made it his goal to increase taxes not only on corporations but also on the wealthiest. The president has repeatedly said he does not intend to raise taxes on those making less than $400,000 per year, although he has come out fervently in favor of soaking the wealthy — Congress, though, has blocked most of those efforts.
For instance, a year ago, during the 2023 State of the Union address, Biden used the speech to call for a “billionaire tax” that would only apply to about 0.01% of consumers.
“Reward work, not just wealth. Pass my proposal for a billionaire minimum tax,” Biden said last year. “Because no billionaire should pay a lower tax rate than a school teacher or a firefighter.”
The tax proposals are also significant because several tax provisions that are part of the 2017 tax cuts are set to sunset next year, creating a significant fiscal cliff for Congress and a key opportunity to re-up or get rid of various tax provisions.
Other provisions coming to an end include the doubled estate tax exemption and the $10,000 cap on deductions for state and local taxes paid.
If Republicans overperform in 2024, holding the White House and both chambers of Congress, they could rewrite and expand those tax breaks. If Democrats amass majorities in Congress, though, they could achieve such wish-list changes as more taxes on the wealthy and a higher corporate tax rate.
Because Biden has drawn the line for tax increases at $400,000, he would presumably support renewing several of the provisions in the Trump tax cuts, particularly the lowered individual tax rates and the increased child tax credit, which was doubled as part of the Tax Cuts and Jobs Act.
Biden is facing a tough election challenge given his low approval ratings, which are particularly low for his economic approval.
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In addition to tax policy, consumers are laser-focused on inflation, which has made life more unaffordable since about the time that Biden was sworn into office in 2021. Republicans blame a rash of government spending early in the president’s term and federal monetary policy for the too-high inflation.
But ahead of the State of the Union address, the White House has recently pivoted to placing some of the onus on “shrinkflation,” which is a portmanteau of “shrink” and “inflation.” They contend that corporations are cheating consumers by giving them less product for the same price — shrinkflation.