Joe Biden’s annual budget proposal of $6.8 trillion, which includes an increase of $5 trillion in taxes to fund it, has shocked many in Congress due to exceeding expectations.
Biden’s new proposal for a $5 trillion increase in taxes was much higher than most in Congress were expecting, which was at most $2.5 trillion. It was also significantly higher than any tax increase Biden had called for during his first two years in office when his party had control of both houses of Congress.
The surprise budget proposal by Joe Biden poses a greater risk for Democrats in the 2024 elections. With Biden likely seeking re-election and Democrats defending 23 seats in the U.S. Senate, including many in red states, the unexpected budget proposal may not sway voters in crucial swing states.
Even though Biden has promised not to increase taxes on individuals earning less than $400,000 per year, many still argue that the new proposal could worsen existing economic problems such as inflation and high tax rates, adding more burden on the finances of ordinary American households.
Senator Mike Crapo (R-ID) criticized the Biden administration’s proposal as “jaw-dropping,” stating that it is the “wrong approach” to address the country’s fiscal issues.
The President’s tax proposals would create a tax regime that would lead to some individuals handing over more than half of their paychecks to the government, and many American businesses doing better off being headquartered overseas. https://t.co/u1ZW32xCEG
— Senator Mike Crapo (@MikeCrapo) March 14, 2023
According to some, the large budget proposal by Biden could be seen as a tactic in negotiations rather than a genuine request. Jim Kessler, a spokesperson for the center-left think tank Third Way, stated, “I didn’t expect to see a number that big, but I’m not alarmed by it. I think it’s a negotiating position.”
In his recent State of the Union address, Biden promised that his budget proposal would decrease the national deficit by at least $2 trillion and make the wealthy and big corporations pay their “fair share” to fund his proposed ideas.
To fund his agenda, Biden has proposed several tax increases, including a 25% tax on the wealthiest 0.01% of families, raising the corporate tax rate from 21% to 28%, and increasing the top marginal income tax rate from 37% to 39.6%. He has also suggested quadrupling the 1% tax on stock buybacks and taxing capital gains at 39.6% for individuals earning more than $1 million.