Biden announced on Tuesday a proposal to raise the surtax on Americans who make more than $400,000 a year, which is used to fund state-funded Medicare, from 3.8% to 5%. That follows a tax increase on wealthy households he proposed last month, which would require individuals and families worth more than $100 million to pay a 20% tax on both income and the unrealized gains of liquid assets, such as stocks.
He is also expected to revive two points from his 2021 Build Back Better agenda: increasing the top marginal income tax rate from 37% to 39.6%, and raising the corporate tax rate from 21% to 28%.
Together, these measures are projected to raise $2 trillion in new funds over the next decade, which Biden is billing as a key way to reduce the budget deficit and limit the increase of the national debt.
"Let’s ask the wealthiest to pay just a little bit more of their fair share, to strengthen Medicare for everyone over the long term," Biden argued in a New York Times op-ed published alongside the proposal on Tuesday.
However, Congressional Republicans have indicated the president’s proposal is dead-on-arrival.
US Sen. Mitch McConnell (R-KY), who leads the GOP minority in the Senate, told reporters on Tuesday that “the president’s budget is replete with what they would do if they could - thank goodness the House is Republican - massive tax increases, more spending.”
“The American people can thank the Republican House” that the proposed tax hikes “will not see the light of day,” McConnell added.
The proposal comes as the Republican-controlled House is locked in a game of chicken with the White House about lifting the debt ceiling. The GOP is hoping the looming threat of a default on the national debt, which would destroy the federal government’s credit rating and plunge the country into a recession, is enough to force Democrats into accepting steep spending cuts they would otherwise never agree to.
The federal government hit the self-imposed appropriations limit on January 19 and the US Treasury has been forced to use what it calls “extraordinary measures” to continue making essential payments on its debts. Treasury Secretary Janet Yellen has estimated that such measures will only work for a few months before a likely default on the debt in June or July.
Though Republicans have opposed much of Biden’s agenda, he has still been able to sign into law and create through executive actions a set of policies that will add $5 trillion to the national debt in the next 10 years, according to estimates by the Committee for a Responsible Federal Budget, a Washington-based public policy organization. However, one of the larger of those proposals, the $400 billion student loan forgiveness plan, is currently under scrutiny by the US Supreme Court.