President Biden's top economic adviser said Friday that lawmakers should use the looming tax debate next year to try to reduce the budget deficit by significantly increasing taxes on corporations and the wealthy.
Under the plan, Biden would more than offset the cost of maintaining tax cuts for people making less than $400,000 a year.
Lael Brainard, who heads the White House National Economic Council, discussed how Biden would shape what is expected to be trillions of dollars in taxes in a speech at the Hamilton Project at the Brookings Institution in Washington. This is the most detailed explanation yet of what we are trying to create. discussion.
A series of tax cuts signed in 2017 by former President Donald J. Trump, who is running against Biden in a rematch this fall, expire at the end of next year. This includes cuts for individuals at all income levels. Republicans included this expiration in the tax bill to reduce the expected cost of the deficit and comply with Congressional rules.
Brainard's speech reiterated Biden's commitment to cutting taxes for middle-class Americans and raising taxes on high-income earners. But her remarks expressed more concern about rising debt and deficits than the president and his aides have previously expressed on the impending tax debate.
“At the very least, if the tax cuts are extended, we should pay for them in full to avoid deepening the fiscal hole created by the Republican tax cuts,” Brainard said in comments released by the White House. Ta. “And we should use the 2025 tax debate as an opportunity to increase overall revenue and meet the needs of our people by demanding that the wealthy and large corporations pay their fair share.”
The comments reflect increased efforts by Democrats and Republicans to define what is expected to be a major tax debate next year.
Mr. Trump and his allies in Congress are seeking to extend all the expired cuts, and the nonpartisan Congressional Budget Office said this week that the measure could increase the federal debt by up to $4.6 trillion over 10 years. announced.
Biden has repeatedly said he only wants to extend individual cuts for households making less than $400,000 a year. He will allow other cuts to expire. The Committee for a Responsible Federal Budget in Washington, a group dedicated to reducing the budget deficit and the nation's mounting debt, said Biden's extension of these provisions would cost between $1.5 trillion and $2.5 trillion over 10 years. However, we estimate that it will probably cost about the same amount. $4 trillion, depending on which provisions the president extends.
Biden's latest budget proposes nearly $5 trillion in tax increases on high-income earners and corporations. It also includes about $2 trillion in new spending programs.
In his speech, Brainard reiterated Biden's call for higher taxes on the wealthy and large corporations, including raising the corporate tax rate to 28%. That's higher than the 21% that Trump's Tax Cuts and Jobs Act introduced, but lower than the 35% that existed before the 2017 tax plan was passed.
He also appeared to suggest that Biden would seek to maintain certain limits on tax credits for households earning more than $400,000 a year, including one that expires at the end of next year. Most notably, it could include maintaining a $10,000 annual limit on the amount of state and local taxes that high-income earners can deduct from their federal income taxes. This has become a hot topic in states with high taxes and predominantly blue-filer populations. New York and California.
“Achieving a fairer tax system also means we cannot extend expired TCJA tax breaks for people with incomes over $400,000 or reinstate deductions and other tax breaks for these households. ,” she said, referring to the 2017 law. “As the president said, the tax cuts for the wealthy will remain expired.”
Brainerd also called for additional tax support for some low- and moderate-income Americans by reinstating the enhanced child tax credit that Biden tentatively signed into law in 2021. This tax credit increased support for parents and contributed to lower taxes for children. Poverty skyrocketed in the year the bill was enacted, but Democrats did not extend it beyond 2022. He also called for making enhanced tax credits permanent through the Affordable Care Act to help people buy health insurance.