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US Plans to Raise Taxes on Wealthy, Corporations

Mon 13 May 2024 | 01:27 AM
Taarek Refaat

The United States plans to impose higher taxes on the wealthy and corporations in exchange for extending tax breaks for the middle class.

A report published by the American network CNBC said that the chief economic advisor to US President Joe Biden has made plans for the looming discussion in the country about the end of tax breaks enacted by former President Donald Trump.

Many provisions of the Tax Cuts Act of 2017 will expire after 2025 without any changes from Congress yet, and these include lower federal income tax brackets, a higher standard deduction, and doubling the estate and gift tax exemption, among other things.

The Republicans' landmark tax package also permanently lowered corporate taxes by lowering the top federal rate from 35% to 21%.

“It is clear that we need to end the 2017 tax breaks for the wealthy and reduce the costly permanent corporate tax breaks,” White House National Economic Adviser Lael Brainard said during a speech to the Hamilton Project at the Brookings Institution last Friday.

The multi-trillion-dollar tax fight comes amid debate over the national debt, and extending tax breaks would increase the budget deficit, according to the Congressional Budget Office.

Trump and other Republicans have pushed for a full extension of the expiring tax breaks, which could add an estimated $4.6 trillion to the deficit over the next decade, according to a Congressional Budget Office report released this week.

“As we approach next year’s tax debate, the stakes could not be higher for the fairness of our tax system and the fiscal future of our country,” Brainard said.

In renewing Biden's "tax justice" pledge, she said that the administration aims to extend the provisions of the TCJA that will expire for middle-class Americans, and these expansions will be funded by increasing taxes on the wealthy and corporations.

The original legislation primarily benefited the wealthiest Americans and "this leakage never occurred," Brainard said.

“Achieving a fairer tax system also means we cannot extend the expiring Trump tax cuts for those whose income exceeds $400,000,” he added.

The administration also wants to quadruple the tax on stock buybacks and add a minimum income tax of 25% on billionaires, Brainard said.

On the other hand, House Republicans have assembled teams to study and propose solutions to address the upcoming tax cliff in 2025.

“If the 2017 Trump tax cuts expire, the average family of four earning $75,000 will see their taxes increase by $1,500 annually,” said Jason Smith, Chairman of the House Ways and Means Committee.