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The Biden administration will target billionaires and corporate America with sweeping tax rises as part of a plan to cut the US’s record national debt and boost the president’s standing with voters ahead of November’s election.
The proposals, expected to be unveiled in Thursday’s State of the Union address and over the following week, include an increase in the minimum corporate tax from 15 per cent to 21 per cent, as well as a 25 per cent minimum tax for billionaires.
The plans are intended to cut the US’s record national debt by $3tn over the next decade. According to the Congressional Budget Office, the independent fiscal watchdog, the country’s debt pile stood at $26.2tn at the end of 2023.
The proposals, which are unlikely to pass Congress but are intended to distinguish Biden’s progressive agenda from that of his Republican rival Donald Trump, come as most voters remain unconvinced by the president’s performance on the economy.
Sixty per cent say they disapprove of Biden’s handling of the economy, according to an FT-Michigan Ross poll conducted last month, while 49 per cent say they are worse off financially than when he took office in 2019.
However, corporations are even more unpopular with voters, with 58 per cent of those polled saying large businesses were taking advantage of high inflation to raise their prices, against 36 per cent who blame Democratic policies for the surge in the cost of living.
Economists, meanwhile, have grown increasingly concerned about the fiscal plans of the Democrats and Republicans. The CBO has warned that debt held by the public is set to rise from 99 per cent of gross domestic product at the end of 2024 to 116 per cent of GDP by the end of 2034. This would mark the highest level ever recorded.
Biden has proposed a billionaire’s tax multiple times in the past few years. He has also said in the past that he would raise the top rate of corporate tax from 21 per cent to 28 per cent.
As part of the new plans, the administration also intends to deny companies tax deductions on employees who are paid more than $1mn. This is expected to raise more than $250bn, according to senior administration officials.
The plans set Biden apart from Trump, who is expected to propose making permanent the tax cuts introduced during his first term of office, which are set to expire in 2025, should he secure a second term in November.
Among those cuts was a reduction in the benchmark corporate levy from 35 per cent to 21 per cent, a move that brought the US into line with averages across advanced economies.
The OECD has proposed a global deal to raise the lowest possible global corporate tax rate to 15 per cent, but many countries have yet to ratify the plan, despite signing up to it.
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