President Joe Biden delivered his third State of the Union address on March 7, emphasizing the tax-policy priorities that will continue to take center stage in his ongoing presidential campaign. Similar to last year’s address, Biden devoted a portion of his speech to highlighting the tax legislation signed into law during the first three years of his term—contrasting it with Republicans’ 2017 Tax Cuts and Jobs Act (TCJA).
Beyond calling attention to his previous legislative achievements, Biden offered insight into his priorities for tax reform if elected to a second term. Most of the tax proposals raised last night are the same or similar to previous Biden administration budget proposals or early versions of the Build Back Better package. Nonetheless, these proposals failed to garner sufficient support from Democratic lawmakers when the party held narrow majorities in both the House and Senate during the 117th Congress, and they were rejected outright by Republicans when the GOP took control of the House for the 118th Congress. One new proposal offered during the address would increase the 15% Corporate Alternative Minimum Tax enacted as part of the Inflation Reduction Act (IRA) to 21%.
Biden’s tax-policy comments during his address included:
- Corporate Tax Increases:
- “It’s time to raise the corporate minimum tax to at least 21% so every big corporation finally begins to pay their fair share.”
- “I also want to end the tax breaks for big pharma, big oil, private jets and massive executive pay! End it now!”
- Individual Tax Increases:
- “No billionaire should pay a lower tax rate than a teacher, a sanitation worker, a nurse! That’s why I’ve proposed a minimum tax of 25% for billionaires… that would raise $500 billion over the next 10 years.”
- Individual Tax Credits:
- “I want to provide an annual tax credit that will give Americans $400 a month for the next two years -— as mortgage rates come down — to put toward their mortgage when they buy their first home or trade up for a little more space.”
- “Restore the child tax credit because no child should go hungry in this country!”
- “I enacted tax credits that save $800 per person per year, reducing health care premiums for millions of working families... I want to make those savings permanent!”
- Critique of the Republican Tax Cuts and Jobs Act:
- “But here’s the deal. The last administration enacted a $2 trillion tax cut that overwhelmingly benefits the very wealthy and the biggest corporations… Does anybody really think the tax code is fair? Do you really think the wealthy and big corporations need another $2 trillion tax break? I sure don’t.”
The Biden administration will provide additional information concerning its tax priorities in the administration’s fiscal year 2025 Budget Proposal and the Treasury Department’s accompanying General Explanations of the Administration’s Revenue Proposals, commonly known as the “Green Book,” both of which are expected to be released on March 11.
The outlook for Biden’s tax priorities depends entirely on the results of the upcoming elections. If Democrats gain a majority in the House, while maintaining control of the Senate and presidency, Biden’s priorities are likely to find their way into future tax legislation, through budget reconciliation legislation like the IRA. While several of the original Build Back Better proposals were rejected by Sens. Joe Manchin (D-WV) and Kyrsten Sinema (I-AZ), neither senator is running for reelection, so Biden may face less internal opposition under a future Democratic trifecta. Furthermore, Biden’s proposed corporate and individual tax increases could offset anticipated expansions of IRA energy credits and/or extensions of expiring provisions enacted in the TCJA that Democrats support, such as lower tax rates for low- and middle-income families and the temporarily increased child tax credit.
Alternatively, these tax proposals may still be considered in a split Congress in exchange for extensions of certain TCJA provisions favored by Republicans. Although Republicans are unlikely to support Biden’s proposed tax on the unrealized capital gains of certain individuals, they may agree to measured tax increases to pay for extensions of greater portions of the expiring individual and business TCJA provisions. If the GOP wins control of both chambers of Congress and the presidency, however, it is unlikely that any of these proposals will be considered by the next Congress.
