Biden is gearing up for a State of the Union address that will include tax proposals for billionaires and corporations

Biden will take the stage Tuesday night for his second State of the Union address, in which he will deliver his annual message to Congress on the nation’s economic, political and legislative status. The president is expected to lean on positive economic news such as a strong job market, but he is also likely to face hostility from Republicans in Congress over inflation and a stalemate on the debt ceiling.

Proposals to increase taxes on billionaires and corporations are said to be key components of Biden’s economic agenda during the speech, plans that are unlikely to win him any new friends from the right wing of Congress. The president is calling on lawmakers to significantly increase the tax rate on corporate buybacks, and he’s repeating a proposal last year that was rejected by Republicans: a billionaire minimum tax that would push ultra-wealthy Americans to pay a tax rate that corresponds to their wealth.

Biden will ask Congress to pass his proposal for a minimum tax Tuesday night, said a preview of his speech, released by the White House on Monday, which outlined his proposed tax code changes as a fight to protect the interests of households working class have been described.

“President Biden is a capitalist and believes that everyone should be able to become a millionaire or a billionaire. He also believes it is wrong for America to have tax laws that result in America’s wealthiest households paying a lower tax rate than working families,” the White House wrote.

taxing their fair share

Biden proposed a minimum tax rate for billionaires of 20% in a budget proposal to Congress last year, arguing that the majority of billionaires’ income comes from their unrealized capital gains, which are not taxed until a stock is sold. This disadvantages working-class Americans, who pay larger portions of income taxes, Biden argued.

Biden will again advocate a billionaire minimum tax tonight, promising in his speech that taxes will remain the same for all Americans earning less than $400,000 a year.

The minimum tax is just one of the tools Biden has at his disposal to level the playing field between the country’s ultra-rich and everyone else. He will also require Congress to quadruple the tax rate levied on corporate share buybacks, where companies buy back their own stock, often to raise the price and enrich investors.

Biden’s speech cited a 2015 Reuters report that linked stock buybacks to executives overcompensating, even when the companies themselves underperformed.

By taxing stock buybacks, Biden aims to encourage companies to reinvest their profits into the national economy rather than increase executive salaries, the White House wrote, to avoid a similar situation with the oil and gas industry last year.

The president has had several run-ins with oil and gas industry executives over the past year, when fossil-fuel companies reaped huge profits but failed to comply with Biden’s calls to increase domestic oil production as pump prices in the US plummeted due to the Ukraine war increased .

“Last year oil and gas companies made record profits and invested very little in domestic production and to keep gas prices down – instead they bought their own stock and gave all that profit to their CEOs and shareholders,” the speech reads.

With oil and gas earnings still buoyant in 2023, Biden is aiming for a tighter tax policy on share buybacks to funnel excess revenue into the economy as a whole.

dead in the water

While Biden will urge Congress to consider higher tax rates, his proposals are unlikely to succeed in DC’s historically hostile climate

Biden’s billionaire minimum tax proposal last year was scrapped when centrist Democrats, including Sen. Joe Manchin III, rejected it, claiming that taxes on unrealized income would never work. Arizona Senator Kyrsten Sinema, who changed her party affiliation to the Independent late last year, has also opposed proposals to raise tax rates for high-income Americans during Biden’s tenure.

Democrats held majorities in both houses of Congress at the time, and it’s even harder for Biden to get a multibillion-dollar tax proposal through the line now that Republicans have control of the House of Representatives.

There are other big economic issues on the horizon for Congress as well. The US budget hit a debt ceiling last month, forcing Treasury Secretary Janet Yellen to announce “extraordinary measures” to get the bills paid by June before the government defaults on its debt.

Over the next few months, Congress will have to figure out how to avoid a self-inflicted economic disaster. Biden and Democrats argue that some fiscal responsibility can be shifted to corporations and the country’s ultra-wealthy, while Republicans have called for a cut in spending on government programs.

Biden said spending cuts are “non-negotiable,” but invited Republican congressional leaders to discuss the issue further. Also this week, Republican nominee Kevin McCarthy expressed his openness to negotiations with Biden and the Democrats.

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