President Joe Biden proposed tax increases on the wealthy and large corporations, along with some new tax credits, in his State of the Union address on Thursday night.
He discussed the upcoming expiration of a tax credit in 2025 related to health insurance premiums from the Affordable Care Act. “Over 100 million of you can no longer be denied health insurance because of pre-existing conditions,” said Biden, according to a transcript from Bloomberg News. “But my predecessor and many in this chamber want to take that protection away by repealing the Affordable Care Act. I won’t let that happen! We stopped you 50 times before and we will stop you again! In fact I am protecting it and expanding it. I enacted tax credits that save $800 per person per year, reducing health care premiums for millions of working families. Those tax credits expire next year. I want to make those savings permanent!”
He also called for a new mortgage tax credit to make home buying more affordable amid high inflation and mortgage rates.
Al Drago/Bloomberg
“If inflation keeps coming down, mortgage rates will come down as well,” he said. “But I’m not waiting. I want to provide an annual tax credit that will give Americans $400 a month for the next two years as mortgage rates come down to put toward their mortgage when they buy a first home or trade up for a little more space.”
However, Biden also called for higher taxes on the wealthy and corporations as a way to reduce the deficit.
“And now it’s my goal to cut the federal deficit $3 trillion more by making big corporations and the very wealthy finally pay their fair share,” he said. “Look, I’m a capitalist. If you want to make a million bucks — great! Just pay your fair share in taxes. A fair Tax Code is how we invest in the things that make a country great — health care, education, defense, and more. But here’s the deal: The last administration enacted a $2 trillion tax cut that overwhelmingly benefits the very wealthy and the biggest corporations and exploded the federal deficit. They added more to the national debt than in any presidential term in American history. For folks at home — does anybody really think the Tax Code is fair? Do you really think the wealthy and big corporations need another $2 trillion in tax breaks? I sure don’t. I’m going to keep fighting like hell to make it fair!”
He proposed to expand the Child Tax Credit while increasing taxes on high earners. “Under my plan nobody earning less than $400,000 will pay an additional penny in federal taxes,” said Biden. “Nobody. Not one penny. In fact the Child Tax Credit I passed during the pandemic cut taxes for millions of working families and cut child poverty in half. Restore the Child Tax Credit because no child should go hungry in this country!”
He also wants to increase corporate taxes. “The way to make the Tax Code fair is to make big corporations and the very wealthy finally pay their share. In 2020, 55 of the biggest companies in America made $40 billion in profits and paid zero in federal income taxes. Not anymore! Thanks to the law I wrote and signed, big companies now have to pay a minimum of 15%. But that’s still less than working people pay in federal taxes. It’s time to raise the corporate minimum tax to at least 21% so every big corporation finally begins to pay their fair share. I also want to end the tax breaks for Big Pharma, Big Oil, private jets, and massive executive pay! End it now!”
Biden’s plan would also propose a minimum tax on billionaires. “There are 1,000 billionaires in America,” he said. “You know what the average federal tax rate for these billionaires is? 8.2%! That’s far less than the vast majority of Americans pay. No billionaire should pay a lower tax rate than a teacher, a sanitation worker, a nurse! That’s why I’ve proposed a minimum tax of 25% for billionaires. Just 25%. That would raise $500 billion over the next 10 years.”
Sen. Katie Britt, R-Alabama, delivered the Republican response from her kitchen. “Under his administration, families are worse off — our communities are less safe, and our country is less secure,” she said, according to the New York Times. “I just wish he understood what real families are facing around kitchen tables just like this one.”
Ahead of the speech, a tax expert reacted to some of the excerpts released earlier that day. “Biden today is expected to reprise many of the same corporate-tax ideas he campaigned on four years ago, on top of proposing new ideas such as raising the corporate minimum tax from 15% to 21%” said John Gimigliano, principal in charge of federal legislative and regulatory services in the Washington national tax office of KPMG LLP. “But if the past is any indication of the future, it won’t be an easy road ahead. As with any election year, a lot still remains uncertain — and all eyes are on November.”
Another tax expert pointed out that the president didn’t mention the tax extenders bill that is now stalled in the Senate. “Surprisingly, Biden didn’t mention the Tax Relief for American Families and Workers Act of 2024, a bipartisan tax bill that overwhelmingly passed the House of Representatives and remains stuck in the Senate,” said Mark Friedlich, vice president of government affairs at Wolters Kluwer Tax & Accounting. “That bill is the president’s best chance to get at least a portion of his objectives, such as the expansion of the child tax credit into law. Most of his tax-related goals are not likely to see the light of day given the divisive environment in Washington, D.C.”
