Republicans in the House and Senate are not going to make it easy for President Joe Biden to pass the budget he just proposed, which contains a massive tax increase and a lot more spending — even as the country continues suffering through a recession on his watch and the national debt has surpassed $31 trillion.
Biden’s proposed federal budget of $6.9 trillion would represent a $1.1 trillion surge from the $5.8 trillion suggested by the White House for the previous fiscal year. The budget also claims to reduce the total deficit from $20 trillion to $17 trillion over the next decade. Republican leaders have announced their opposition to the plan, citing concerns over the expansion of social programs and the proposed increase in taxes.
“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,” House Speaker Kevin McCarthy (R-CA) noted on social media. “Washington has a spending problem, not a revenue problem.”
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.
Mr. President: Washington has a spending problem, NOT a revenue problem.
— Kevin McCarthy (@SpeakerMcCarthy) March 9, 2023
Senate Finance Committee Mike Crapo (R-Idaho), the ranking member of the panel, likewise noted that Biden’s budget proposal fails to encourage job creation and higher wages while increasing tax burdens and expenditure levels, according to a statement.
“The President’s budget makes clear the 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,” Crapo said.
“Republican tax reform led to one of the strongest economies in decades, and tax revenues hit record highs in fiscal year 2022 on the back of these reforms. Despite recently passing nearly $500 billion in additional taxes on America’s job creators, the White House wants to go further, continuing to rehash tax hike proposals that even the prior Democrat-controlled Congress would not support. Revenues are not the problem; Washington’s insatiable appetite for unfettered spending is the problem. The spending binge must stop,” he added.
“As hardworking Americans and job creators continue to face elevated inflation and supply-chain challenges, it is critical that our tax system promotes American jobs, manufacturing and higher wages for hardworking families. Preserving and building on pro-growth tax policy like Republicans’ 2017 tax reform will help reignite our economy and restore fiscal sustainability,” he continued.
“The federal government can’t get enough of taxpayers’ hard-earned dollars,” Sen. Marsha Blackburn (R-TN) said in a statement, adding on Twitter that “Joe Biden’s disastrous budget will be dead on arrival.”
Joe Biden’s disastrous budget will be dead on arrival.
— Sen. Marsha Blackburn (@MarshaBlackburn) March 9, 2023
According to Crapo, Biden’s budget calls for an increase of $4.7 trillion in taxes over the next 10 years. Here’s the breakdown:
A tax on individuals across income levels: The President’s budget calls for hiking the individual federal income tax rate up to 39.6 percent from 37 percent, not including surtaxes. In addition to raising the rate, the proposal also lowers tax brackets by hundreds of thousands of dollars, thereby pushing tax increases on even more hardworking Americans.
A tax on Main Street: The President’s budget calls for a 5 percent surtax on gross income above $400,000, and for extending the surtax to business income and investment income alike. Hardworking entrepreneurs could face federal taxes of roughly 42 percent, and nearly 45 percent when combined with the President’s individual rate increase proposal. Add in state and local taxes, and many–particularly in high-tax states—would see their tax rate soar well above 50 percent, regardless of whether they reinvest money into their businesses.
A tax on America’s job creators: The President’s budget calls for increasing the income tax rate on incorporated businesses to 28 percent. According to the nonpartisan Joint Committee on Taxation, the effects of hiking this tax would primarily be borne by those making less than $500,000 per year. A separate study shows consumers shoulder more than 30 percent of any comparable tax increase. When combined with state and local taxes, many companies would face an income tax rate far higher than China’s (25 percent) and Europe (average 21.7 percent).
A tax that gives China the upper hand: Despite negotiating a 15 percent global minimum tax rate for the rest of the world, the President’s budget calls for hiking the U.S. global minimum tax rate to 21 percent, giving our biggest foreign competitors—like China—the upper hand.
A tax on savings and investment: The President’s budget calls for quadrupling the stock buyback excise tax, harming Americans who save, invest, or participate in retirement plans. Imposing an excise tax on savings and investment artificially skews how a business decides to best use its funds.
A tax on entrepreneurship and property: The President’s budget calls for implementing a new and complicated minimum tax on some property owners, specifically on the unrealized increase in the value of their property. This national property tax would discourage innovation and entrepreneurship, create additional difficulty for taxpayers and the overwhelmed Internal Revenue Service, and raise significant Constitutional issues.
