The Washington Post on Biden, taxes and the middle class

Like most presidential budgets before it, President Biden’s fiscal 2025 tax and spending blueprint is more of a political statement than an actual legislative proposal. Basically, it’s a reelection pitch straight from the “Middle Class Joe” playbook he ran on in 2020: raise taxes on the rich and businesses and spend much of the proceeds on federal support for child care, health care and housing. These traditional Democratic priorities failed to become law even when Mr. Biden’s party narrowly controlled Congress, so there is zero chance of enactment now.

Considered differently, however — as a reminder of how another four years of Mr. Biden in the White House would be unlike a second term for likely GOP nominee Donald Trump — the document has somewhat more meaning. That is especially true for what might be the first major policy area to feel the impact of the voters’ decision in November: taxes.

The short version is that Mr. Biden’s tax plan would be fairer and more fiscally responsible than Mr. Trump’s. The longer version is: Despite this reality, the country needs a reckoning on its unsustainable budgetary path, and Mr. Biden’s proposals, though better than the alternative, do not envisage one.

The wide-ranging tax cuts a Republican Congress and Mr. Trump pushed through in late 2017 are set to expire at the end of 2025 — except for the corporate tax-rate cut, which doesn’t expire. It’s a looming deadline that will force whoever occupies the White House and Congress next year to prevent a sudden reversion to pre2018 law. That would lead to mixed results in terms of equity and efficiency. Upper-income households would face a higher marginal rate; yet the irrational deduction for state and local taxes paid would also be restored. And it would impose a large tax increase on the economy as a whole. Better to plan ahead for selective reinstatement of higher taxes, where needed, and preservation of what was beneficial about the Trump bill.

Mr. Trump, of course, favors simply extending the entire law — estimated to cost $3.3 trillion over the next decade (with no realistic plan yet to pay for it). Mr. Biden, by contrast, makes it clear in his budget that he would raise taxes on wealthier Americans and corporations. His proposal lifts the corporate rate to 28 percent from the current 21 percent, among other increases such as hiking the corporate stock buyback tax. He also wants a minimum 25 percent tax on families with more than $100 million in wealth. (This would include taxing unrealized capital gains, an idea we have opposed because it is tricky to implement in practice and likely subject to constitutional challenges.) These changes would raise about $5 trillion.

Mr. Biden is at least right that the federal government needs more reve

nue and should raise it from those best able to pay. (Mr. Trump, in turn, is starting to realize that it’s bad politics to advocate for even greater corporate tax cuts; he talks less these days about his previous promise to lower the top corporate rate to 15 percent.) The president is wrong, though, to insist he won’t raise taxes on individuals earning under $400,000 a year ($450,000 for couples), as though that income level defined the middle class. In fact, it exempts all but 1 or 2 percent of taxpayers, including the entire upper middle class, from any new responsibility for helping the government pay its bills. It even rules out a much-needed increase in the federal excise tax on motor fuels, which hasn’t been raised in more than 30 years.

That isn’t fair and it isn’t fiscally responsible. Still, it is heartening that Mr. Biden is at least trying to be mindful of the national debt. Even after adding many new programs, his budget would shave about $3 trillion off the deficit over the next decade. Of course, that’s a modest reduction considering the deficit is still set to grow $16 trillion in that time frame. He, like Mr. Trump, is committed to the unrealistic promise of leaving Social Security and Medicare untouched.

For now, most Americans probably aren’t paying much attention to budget proposals. They see an economy that is growing rapidly and a job market that offers plentiful opportunities, but are still hurting from the inflation spike of 2022. Soon, though, voters will have to focus not just on the familiar personas of the two candidates who are set to face off again in November. They will have to consider the actual economic policy each would support. On taxes, an issue that the president inaugurated in January will have to address, Mr. Biden has the better, if far from ideal, approach.

ONLINE: https://www.washingtonpost.com/opinions/2024/03/11/ biden-budget-priorities-trump/