WASHINGTON — President Joe Biden is gearing up to raise taxes on wealthy people in the U.S. if he’s re-elected this fall, picking a fight with Republican rival Donald Trump, who is promising even deeper tax cuts if he returns to the White House.
Major parts of the 2017 Trump tax cuts are scheduled to expire at the end of 2025, splitting the two parties over whether to extend or end them. Keeping them would add $3.3 trillion to the debt over the next 10 years, according to the nonpartisan Congressional Budget Office. Democrats are unifying behind a push to raise taxes on upper earners, while Republicans want to keep the tax breaks. The outcome will be decided by the winners of the White House and Congress.
Biden is promising to end the Trump tax breaks for incomes above $400,000 while vowing not to raise taxes for those making less.
“If Trump gets elected, he’ll cut taxes for him and his rich friends at the expense of working families. We can’t let that happen,” Biden said last week on social media.
Biden has repeatedly taken aim at Trump’s upper-income tax breaks, saying in April: “That tax cut is going to expire. If I’m re-elected, it’s going to stay expired.”
Biden’s recent budget and a memo Thursday by top Biden economic adviser Lael Brainard laid out the White House’s vision for bringing in new revenue: raise the corporate tax from 21% to 28%, impose a 25% minimum income tax on billionaires, increase the marginal tax rates on the highest incomes from 37% to 39.6% and boost taxes on capital gains for high earners.
On the campaign trail, Trump is celebrating his 2017 tax cuts and hitting Biden on the issue.
“He wants to let our tax cuts expire!” Trump said at a rally last month in Wildwood, New Jersey. “Instead of a Biden tax hike, I’ll give you a Trump middle-class, upper-class, lower-class, business-class — big tax cut. You’re going to have the biggest tax cut.”
But his plan isn’t specific, and it doesn’t address the rising national debt, an issue Republicans say they worry about. Trump didn’t even mention his 2017 tax cuts in a closed-door meeting Thursday with Republicans, according to three senators in the room. And he is now touting a different idea that he didn’t pursue during his presidency: ending taxes on tips.
Democrats: ‘End these really damaging Trump tax provisions’
Many liberals are eager for a fight when Trump’s tax cuts expire, and Senate Finance Committee Chair Ron Wyden, D-Ore., said he plans to meet with committee Democrats this Thursday to discuss the way forward.
Sen. Elizabeth Warren, D-Mass., said in a speech Monday: “The 2025 tax fight will create a huge opportunity to break with decades of tax-cutting political orthodoxy and reshape the tax code to reflect our nation’s values by raising taxes on the wealthy. That’s what Americans across the country are demanding, that’s what Joe Biden is running on, and that’s a big reason why Joe Biden will win in November. Next year, we must raise taxes on giant corporations and billionaires.”
Rep. Pat Ryan, D-N.Y., who represents a suburban swing district, said that with the “damaging” Trump tax cuts expiring, “2025 is a year where we can finally make the ultra-wealthy and big corporations pay their fair share.”
He said it’s essential to bring in more revenue to the Treasury to protect Social Security and Medicare in the long haul, and he accused Republicans of wanting to reduce retirement benefits “to pay for these bailouts and tax breaks” for the rich.
“So it’s a one-two punch to working people and the 99% of the American people,” Ryan said.
Meanwhile, Republicans are lining up behind Trump’s push to continue the tax breaks across the board.
“We’ve got to have these tax cuts extended,” said Rep. Ralph Norman, R-S.C., who is on the Rules Committee, which decides what bills get votes in the full House. “We will under Trump. We will not under Biden.”
Sen. Mike Crapo, R-Idaho, the ranking member of the tax-writing Finance Committee, who could become chairman if Republicans win control of the Senate, rejected Biden’s call for tax increases on incomes above $400,000.
“No, I’m not willing to go with that,” Crapo said.
He said the tax cuts might require “some fine-tuning” if they’re extended, “but I’m not going to put any arbitrary line in place.”
Rep. Andy Barr, R-Ky., said he’d like to see the Trump tax cuts “made permanent” and to build on them. “I’d like to see more and more aggressive supply-side tax cuts, growth-oriented tax cuts,” he said. “I’d also like to see smarter capital gains tax reductions.”
Hurdles to Biden’s plan
Biden’s pledge to undo tax cuts for incomes above $400,000 is easier said than done. For instance, the 2017 tax cuts nearly doubled the standard deduction, which many middle-income families use. And many Democrats favor the expiration of the $10,000 federal limit on state and local tax deductions, which would enable many higher earners to pay less. It’s unclear how Biden would rewrite the tax code to end those breaks only for upper earners and preserve them for others.
A White House official said that the economic team hasn’t yet fleshed out a concrete policy proposal for how to accomplish that goal and that there are “different ways to try to implement our principles.” The official also said it’s “premature” to say whether Congress should move quickly to impose taxes on wealthier people in early 2025 and whether it should use the filibuster-proof reconciliation process, which covers taxes and spending and could allow Democrats to bypass Republican opposition in Congress.
Wyden said that it’ll be a high priority next year and that congressional Democrats share a philosophy with Biden on taxes.
“You bet we will have a significant discussion about the president’s proposal,” he said. “I’ve talked to the Biden administration about this: Success and fairness are not incompatible. We want people to do well, and people are going to do well under our approaches. But if nurses and teachers and firefighters have to pay taxes with every paycheck, we want some fairness from the billionaires.”
In addition to the presidency, the makeup of Congress will determine what happens to the Trump tax cuts. Full control would give either party an open road to pursue its agenda, but divided government might force the two sides to negotiate a bipartisan deal that includes some victories for each party.
Warren urged Democrats on Monday not to “take the coward’s way out and sign our names to a half-baked deal that lets the wealthy off the hook,” warning that such a move would be a “huge failure.”
Republican Rep. Carlos Gimenez, who represents a competitive district in Florida, said any push to raise taxes, including on high earners, would be dead on arrival if Republicans keep the House — even if Biden is re-elected.
He said the Trump tax cuts should be extended.
“I like what it did for our economy,” he said. “I’m a lower tax guy.”
