President Joe Biden released his administration’s $6.8 trillion budget for fiscal year 2024 on March 9, “a blue-collar blueprint to rebuild America in a fiscally responsible way that leaves no one behind,” which includes a series of higher taxes on wealthy Americans and on corporations.
The budget, if enacted, would notably implement a Billionaire Minimum Tax of 25% on taxpayers with wealth greater than $100 million “to ensure the top 0.01% pay taxes as they go, just like everyone else who earns a paycheck,” Treasury Secretary Janet Yellen said in a March 9 statement.
The administration said in its proposal that the reforms to the taxation of capital gains would reduce economic disparities among Americans and raise needed revenue.
“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 administration said in a fact sheet, adding that this, combined with sophisticated tax planning and giant loopholes, allows many of the wealthiest Americans to pay an average tax rate of just 8% on their full incomes.
Commenting on the new 25% tax, the “Patriotic Millionaires” – a group of high-net-worth individuals, tweeted: “Billionaires pay a lower tax rate (on way more money) than working people. The ONLY solution is to tax wealth and unrealized cap gains.”
These new taxes also aim at reducing the deficit by $3 trillion and provide expanded funding for tax credits for workers and families.
Concretely, the way this proposal translates for Americans is that for one, the budget would restore the full Child Tax Credit enacted in the American Rescue Plan, to $3,000 per child for children six years old and above, and to $3,600 per child for children under six, from $2,000 per child, according to a White House fact sheet.
Meanwhile, the Earned Income Tax Credit expansion for childless workers would become permanent.
In addition, the taxes would help expand access to affordable, high-quality early childcare and learning, enabling some parents to re-enter the workforce.
Another way the taxes could help lower-income families is that it would boost financial aid for higher education. Indeed, the proposal includes an increase to the discretionary maximum Pell Grant by $500, expanding access to the grant to reach over 6.8 million students with money for college, according to the budget.
“Through President Biden’s proposed budget plan, the average American will have the support they need to get ahead in life,” said David Carlucci, consultant and former New York State Senator. “Restoring and expanding the child tax credit will give hardworking families the breathing room they deserve. Aging adults will be able to access the medicines they need through strengthening Medicare and lowering health and prescription costs. It is clear that if passed, this budget will give Americans the resources necessary to flourish in today’s world.”
Republicans, meanwhile have been criticizing the administration’s proposed budget, calling it “reckless.”
The House Republican Leadership said in a statement on March 9: “We must cut wasteful government spending. Our debt is one of the greatest threats to America and the time to address this crisis is now. Yet, President Biden is proposing out of control spending and delaying debt negotiations, following his pattern of shrugging and ignoring when faced with a crisis.
More From GOBankingRates