Rich Americans to pay more income tax under Biden’s budget proposals

The Biden administration in the United States is proposing to restrict borrowing, provide billions more in funding to the military and law enforcement, and to introduce new taxes on the wealthiest Americans.

The administration on Monday proposed a $5.8 trillion (€5.3 trillion) budget for the fiscal year 2023.

The budget blueprint essentially sets outs the president's goals and priorities for the year. Ultimately, it is the United States Congress that will decide whether the measures set out in the Biden plan will actually go ahead.

The Biden plan also put forward plans to reduce the US budget deficit by $1 trillion over the next decade.

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The administration is proposing a new “billionaire minimum income tax” measure.

This would see American households worth more than $100 million paying a rate of at least 20 per cent on all income including as unrealised gains in the value of their liquid assets.

The White House budget also calls for other tax increases on the rich. It would raise the top individual income tax rate to 39.6 per cent from 37 per cent.

Under the plan the corporate tax rate would increase from 21 per cent to 28 per cent.

The White House is proposing increasing the military budget to about $773 billion, an increase of nearly 10 per cent over the level approved by Congress for the 2021 fiscal year. The administration argues that the move reflects the ongoing threats such as Russia's invasion of Ukraine and the growing risk of cyberattacks. The budget proposal includes a request for $6.9 billion to help the western Nato military alliance counter threats from Russia and elsewhere.

At a time of high inflation, the White House proposal allocates funding for port infrastructure development, improvements to railways, and money to help with financing the construction and rehabilitation of inexpensive housing stock – measures that it believes may assist in improving supply in the economy over time.

Climate change

The plan also includes $5 billion for climate change programmes, including $375 million for scientific research initiatives and $325 million to reduce the risk of wildfires and restore lands that had been affected.

The budget plan also allocates $773 million towards curbing greenhouse gas emissions.

The administration is also seeking $56.7 billion for the Department of Homeland Security, which is about a 5 per cent increase over the spending level for 2021.

President Biden said on Monday that budgets were “ statements of values”. He said his proposals sent “ a clear message that we value fiscal responsibility, safety and security at home and around the world, and the investments needed to continue our equitable growth and build a better America”.

“My administration is on track to reduce the federal deficit by more than $1.3 trillion this year, cutting in half the deficit from the last year of the previous administration and delivering the largest one-year reduction in the deficit in US history. That’s the direct result of my administration’s strategy to get the pandemic under control and grow the economy from the bottom up and the middle out.”