Amanda Andrade-Rhoades/For The Washington Post via Getty Images
- Biden will call again for a 20% minimum tax for billionaires in his State of the Union address Tuesday.
- The US president also wants to quadruple the 1% surcharge on corporate stock buybacks.
- But with Republicans controlling the US House, it’s unlikely that the plans will go through.
US President Joe Biden will revive his plan for a new minimum tax on billionaires and call for a bigger tax on corporate stock buybacks during his State of the Union address on Tuesday.
He will renew his call for Congress to pass legislation to ensure America’s richest households pay a minimum of 20% tax on income, according to a White House preview of the speech. It would also cover unrealized gains on investments from assets like stocks and bonds.
“This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters,” the White House said in the fact sheet. It added that in a typical year, billionaires enjoy a tax rate of 8%.
But the Biden administration’s push for higher taxes on households worth $100 million or more — first floated in March last year — is likely to falter in the face of opposition from Republicans, who control the House of Representatives. Previous attempts to raise taxes have also been thwarted by fellow Democrats.
In his second SOTN speech, the US president also plans to call for the surcharge on corporate stock buybacks to increase to four times the rate. The current 1% stock buyback tax was brought in as part of the Inflation Reduction Act passed in January.
The higher rate should give companies an incentive for reinvesting in their own growth and productivity, rather than “paying out corporate executives or funneling tax-preferred profits to foreign shareholders,” the White House said.
“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, giving all that profit to their CEOs and shareholders,” it said.
It’s also sees the higher surcharge likely to act as a bigger deterrent for companies wanting to buy back their own shares than the current level does.
The White House said Biden would recap his efforts to lower inflation while maintaining a resilient job market during the speech, just days after the unexpectedly strong January jobs report in which the economy added a whopping 517,000 jobs.
The president is underscoring his commitment to reducing the federal budget deficit “by ensuring the wealthy and large corporations pay their fair share,” it said.
Investors are increasingly concerned about the risk to the economy if the US slips back into debt default, after having to bring in “extraordinary measures” after hitting its $31.4 trillion borrowing limit in January.