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Joe Biden unveiled the first version of the new federal budget and there were not many surprises. Although the White House assures that its creation will contribute to fiscal balance, the text includes tax hikes and an increase in public spending. Republicans are not very pleased with the proposal and are expected to draft one of their own in the coming weeks.
The federal government won’t pay for itself, and the Biden administration proposed $6.9 trillion for the period beginning in September 2023 and ending in October 2024. This is a nominal increase of $1.1 trillion over the previous fiscal year’s budget, set at $5.8 trillion.
Biden’s proposal comes hand in hand with two old acquaintances –tax increases and government overspending. Regarding the first point, the budget includes a minimum tax of 25% for those with more than $100 million in wealth. The measure has already been dubbed the “multimillionaire minimum tax”. In addition, the top tax rate would rise from the current 37 % to 39.6 %, thus returning to levels prior to the Jobs and Tax Cut Act of 2017, pushed by Donald Trump’s administration.
The budget states that “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.”
“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,” the text adds.
Corporations would not be left out of the tax increases either. The corporate tax would increase from 21% to 28%, halfway to where it was before Trump’s bill, when it was 35%. The budget would also increase the stock buyback tax fourfold, from 1% to 4%.
In addition, it would increase the investment income tax used to fund Medicare from 3.8% to 5% for individuals earning more than $400,000 a year. According to the White House, this would extend the solvency of the Medicare Hospital Insurance Trust Fund for at least 25 years.
Regarding fiscal balance, Shalanda Young, director of the Office of Management and Budget, assured that “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.”
“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,” he added in a statement.
According to Biden’s new budget, it would reduce the overall deficit over the next decade from $20 trillion to $17 trillion. This would be achieved through the enumerated tax increases, such as the tax on wealthy households and the tax on stock buybacks, which would increase revenues by $1.1 trillion over the next 10 years. The corporate tax increase would add $1.3 trillion in revenue over the same period.
Federal agencies would benefit the most from the new budget since many of them would see an increase in their coffers for the next fiscal year. For example, appropriations for the Department of Labor would increase by 11%, a number that falls short of the 13.6% for the Department of Education and even short of the Environmental Protection Agency, whose appropriation would increase by 19%. In contrast, the budgets for the Department of Defense and the Department of Veterans Affairs would increase by 3.2% and 2.2%, respectively.
The Republican response to Biden’s budget: “dead” before arrival.
Congressional Republicans were not pleased with the new budget’s content. One of the first to show his dissatisfaction was Kevin McCarthy, Speaker of the House of Representatives, who will be one of the people to convince to get the text through Capitol Hill.
“President Biden just delivered his budget to Congress, and it is completely unserious. He proposes trillions in new taxes that you and your family will pay directly or through higher costs. Washington has a spending problem, not a revenue problem,” the Californian said on social media.
For Senator Mike Crapo (R-ID), the budget makes it clear that the Biden administration “has not learned from its mistakes that have led to two years of record-high inflation and excessive deficit spending. Instead, this administration is doubling down with more of the same.”
Senator Marsha Blackburn (R-TN) was even blunter, asserting that “Joe Biden’s disastrous budget will be dead on arrival” in Congress. “The federal government can’t get enough of spending taxpayers’ hard-earned dollars,” she added in a statement.
Joaquín Núñez es licenciado en comunicación periodística por la Universidad Católica Argentina. Se especializa en el escenario internacional y en la política nacional norteamericana. Confeso hincha de Racing Club de Avellaneda. Contacto: [email protected] // Joaquín Núñez has a degree in journalistic communication from the Universidad Católica Argentina. He specializes in the international scene and national American politics. Confessed fan of Racing Club of Avellaneda. Contact: [email protected]