President Joe Biden unveiled record spending and several new tax increases on Thursday in his budget proposal for fiscal year 2024.
The suggested $6.9 trillion for the federal government’s operations between October 1, 2023, and September 30, 2024, would mark a $1.1 trillion increase from the $5.8 trillion proposed by the commander-in-chief for the previous fiscal year. House Republicans are expected to reject the proposal and counter with a budget of their own.
“This year’s budget cuts the deficit by nearly $3 trillion over the next decade by asking the wealthy and big corporations to begin to pay their fair share,” Office of Management and Budget Director Shalanda Young said in a statement. “It does this in part by reforming our tax code to reward work, not wealth, including by ensuring that no billionaire pays a lower tax rate than a teacher or a firefighter, and by quadrupling the tax on corporate stock buybacks.”
The budget proposal is indeed marked by a number of tax hikes on affluent households, including a 25% minimum tax on those with more than $100 million in wealth that the budget calls a “billionaire minimum tax.” The top marginal tax rate would also be increased to 39.6% from the current 37%, which would represent a return to levels seen before the Tax Cuts and Jobs Act of 2017, the hallmark legislative accomplishment of former President Donald Trump.
The budget would also increase the investment income tax used to fund Medicare from 3.8% to 5% for individuals earning more than $400,000 per year, a move that the White House claims would extend the solvency of the Medicare Hospital Insurance Trust Fund for at least 25 years.
“The tax code currently offers special treatment for the types of income that wealthy people enjoy. Whereas the wages and salaries that everyday Americans earn are taxed as ordinary income, billionaires make their money in ways that are taxed at lower rates, and sometimes not taxed at all,” the budget said. “This special treatment, combined with sophisticated tax planning and giant loopholes, allows many of the wealthiest Americans to pay lower rates on their full income than many middle-class households pay.”
Businesses would likewise see a number of tax hikes, including an increase in the corporate tax to 28%, which would split the difference between the current 21% rate and the previous 35% rate that was in effect before the Tax Cuts and Jobs Act. The budget would also quadruple the stock buyback tax from 1% to 4% such that companies invest unused profits in operations.
A number of federal agencies would see large budget increases relative to enacted levels in the previous fiscal year: allocations for the Labor Department would rise by 11%, allocations for the Education Department would rise by 13.6%, and allocations for the Environmental Protection Agency would rise by 19%. Budgets for the Defense Department and the Department of Veterans Affairs would meanwhile increase 3.2% and 2.2% respectively.
The budget proposal would decrease the total deficit over the next decade from $20 trillion to $17 trillion. Reforms to taxes on wealthy households and the stock buyback penalty would increase revenues by $1.1 trillion over the next decade, while the hike in the corporate tax would increase revenues by $1.3 trillion. Childcare, early learning, housing, higher education, and other social initiatives would meanwhile introduce $1.1 trillion in new spending, while paid leave programs and tax benefits for certain families would reduce revenues by $1.0 trillion.