US President Joe Biden will present the budget for fiscal 2024 on Thursday. The Budget proposal, which will lay out spending and revenue priorities will be pivotal during negotiations with Republicans over raising the debt ceiling.
The document, mostly seen as a wish list at a time when Congress remains divided, will include a series of new tax increases on billionaires, rich investors and corporations apart from taxes and spending, reported news agency Reuters.
Curbing National Deficit
Biden is expected to double down on a State of the Union pledge to cut the national deficit, aiming to cut almost $3 trillion over 10 years, with tax hikes on companies and high earners, reported news agency Reuters. The US federal deficit touched $1.4 trillion in 2023, the Congressional Budget Office said.
In a bid to trim the deficit, the administration would launch new initiatives to crack down on fraud in pandemic-era spending, and other government aid programmes. The President also aims to increase fines on companies that violate labour laws and divert funding that would have gone to federal prison construction.
Pushing Medicare With Taxes
There are plans to raise the Medicare tax on income above $400,000 from 3.8 per cent to 5 per cent, and support the federal government's ability in negotiating drug prices to keep the healthcare program solvent, the White House said this week.
The Budget also aims for commercial health insurance plans to provide rebates when some drug prices increase faster than the rate of inflation.
Other proposals in the healthcare segment will include increasing access to HIV prevention drugs for people in enrolled in Medicaid and requiring insurance plans to pay back that federal program when they spend less on patient care. Gilead Sciences' (GILD.O) Truvada and Descovy are approved in the U.S. for pre-exposure prophylaxis for HIV.
Buyback Tax Likely To Be Raised
The President is likely to propose quadrupling the 1 per cent tax on stock buybacks that took effect in January, to encourage companies to invest in their growth instead of boosting shareholders.
The White House has pointed out earlier that taxing buybacks levels a distortion in the tax system. Dividends, it said, are taxable for many shareholders but share buybacks weren't taxable until this year. However, the plan to boost the buyback tax may face a challenge to move through the US Congress where Republicans control the House.
Billionaire Minimum Tax, Capital Gains
Biden will call for a 25 per cent minimum tax on households worth more than $100 million. The White House refers to it as the "billionaire minimum income tax."
The tax would make sure the wealthiest of Americans do not pay a tax rate lower than firefighters and teachers, a White House official said. Several attempts by Democrats to push such a proposal have failed to move forward in Congress.
Eying Rise In Corporate Tax Rate
There will be a proposal to raise the corporate tax rate to 28 per cent, well above the current rate of 7.8 per cent established after tax cuts pushed through by former President Donald Trump, but still below the 35 per cent tax rate that prevailed before 2017.
He will also seek to reduce the incentives for companies to book profits in low-tax jurisdictions and raise the tax rate on U.S. multinationals’ foreign earnings from 10.5per cent to 21per cent.