Biden to call for corporate tax hikes, middle-class tax cuts and budget deficit reduction in State of the Union

WASHINGTON (AP) — President Joe Biden heads into Thursday’s State of the Union address with an expansion plan to raise corporate taxes and use the revenue to reduce the budget deficit and cut taxes for the middle class.

In this election year, Democratic presidents are seeking to refine the economic policies they have pushed since the 2020 presidential election and show they are addressing voters’ concerns about the cost of living. With Republicans in control of the House of Representatives, Biden’s policies are unlikely to become law, making them more of a sales pitch to voters.

Aides, including White House National Economic Council Chairman Lael Brainard, said in a preview of Biden’s remarks that the president plans to extend former President Donald Trump’s expiring tax cuts and corporate tax rates. He said he would contrast this with the Republican Party’s plan to further reduce the rate.

Under Mr. Biden’s proposal, companies would no longer be able to deduct expenses of more than $1 million from employee paychecks, potentially raising $270 billion over 10 years. He wants to take measures such as raising the corporate tax rate from 21% to 28%. And, as Mr. Biden previously proposed, large corporations would be subject to a minimum tax rate that would prevent them from evading the IRS through accounting maneuvers, deductions, and special tax breaks.

His plan would require billionaires to pay at least 25% federal tax on their income. People with incomes over $400,000 would also pay higher Medicare taxes to ensure the program’s financial viability.

Biden would use some of those revenues to expand the Earned Income Tax Credit and Child Tax Credit, which help low-income families. He also wants to permanently lower health insurance premiums for people who receive health insurance through the 2010 Affordable Care Act.

Aides said Mr. Biden’s upcoming budget proposal would reduce the national debt by $3 trillion over 10 years, similar to what he proposed in last year’s budget, which was not approved by Congress.