State of the Union: Biden to push wealth, company tax ideas

White House officials said Biden will preview the steps that will be part of a proposed fiscal 2025 budget released next week that aims to decrease the federal deficit by $3 trillion over 10 years while cutting taxes for low-income Americans. The tax plans are expected to form a core part of the Democratic president's re-election campaign, contrasting with Republican candidate Donald Trump, who signed a 2017 law that slashed taxes on companies and the wealthy.

U.S. President Joe Biden on Thursday will escalate a crusade to tax wealthy Americans and large companies more in his State of the Union address, proposing to hike corporate minimum taxes and curb executive pay and corporate jet deductions. White House officials said Biden will preview the steps that will be part of a proposed fiscal 2025 budget released next week that aims to decrease the federal deficit by $3 trillion over 10 years while cutting taxes for low-income Americans.

The tax plans are expected to form a core part of the Democratic president's re-election campaign, contrasting with Republican candidate Donald Trump, who signed a 2017 law that slashed taxes on companies and the wealthy. "Congressional Republicans want to cut taxes even more for the wealthy and big corporations, all while adding more than $3 trillion to the debt," said Lael Brainard, director of the White House's National Economic Council. "President Biden has made clear whose side he's on."

Most of Biden's tax proposals have little chance of enactment unless Democrats win strong majorities in both chambers of Congress in November, a sweep that polls suggest is unlikely. These proposals include Biden's previous calls to raise the corporate tax rate to 28% from the current 21%, recouping half of Republicans' 2017 cut.

CORPORATE MINIMUM TAX HIKE Biden now wants to increase to 21% a 15% corporate minimum tax on companies reporting over $1 billion in profit that he won as part of 2022 clean energy legislation. He will also propose quadrupling a 1% tax on corporate stock buybacks, another revenue-raiser approved that year.

TAX BREAK CURBS Biden also will call for Congress to approve far stricter limits on business income deductions for executive pay, limiting them to $1 million for any given employee.

Current law prohibits deductions on compensation for chief executive officers, chief financial officers and other key positions. White House officials said the new proposal would cover all employees paid more than $1 million, and raise more than $250 billion in new corporate tax revenue over 10 years. Biden will also go after business income deductions for the use of corporate jets, an area already targeted for audits by the Internal Revenue Service. This includes extending the depreciation period for corporate jets to seven years, the same as commercial aircraft, from five years currently, reducing annual deductions, an administration official said.

Biden will renew his "billionaire tax" proposal, which is actually significantly below that level. It imposes a 25% minimum tax on income for those Americans with wealth of more than $100 million. The average American worker paid about a 25% tax rate in 2022, the OECD reported. White House research found the wealthiest individuals paid about 8% from 2010 to 2018.

Biden will pledge to extend Trump-era tax cuts for those earning under $400,000 and revive a COVID-era expansion of the Child Tax Credit and increase a tax credit for low-wage workers. His latest proposals drew a sharp rebuke from the U.S. Chamber of Commerce, which has made preserving the 2017 Republican tax cuts a top priority.

Biden's policies "would actually result in lower economic growth, fewer new business starts, less job creation, and fewer choices for American families," said Neil Bradley, the Chamber's chief policy officer. But Chuck Marr, who heads tax policy at the left-leaning Center on Budget and Policy Priorities, said Biden's "course correction" would make the U.S. tax system fairer.

“President Biden's tax proposals recognize that the 2017 Trump tax law - as exemplified in the corporate tax rate cut - was skewed to the wealthy, expensive, and failed to deliver on its promises," Marr said. As consumers continue to face high prices, Biden also will outline steps that his administration is taking to cut "corporate rip-offs" including added "junk" fees, price gouging and reduced package sizes to hide price hikes. So-called "shrinkflation" was bemoaned on Monday by Sesame Street muppet Cookie Monster in a widely reported X social media post.

After a move this week to cap credit card late fees at $8, Biden also will call for crackdowns on "exploitative" practices with branded credit cards, including devaluing air miles and points.