Biden pitches trillions in tax hikes in budget proposal

WASHINGTON — President Biden’s annual budget plan calls for roughly $5.5 trillion in tax increases over the next decade to offset proposed spending increases — including a massive 5.2% federal worker pay raise.

The package, to be announced later Thursday, is headed for certain defeat in the Republican-held House of Representatives and comes as the GOP demands spending cuts without new taxes in a standoff with Biden over raising the federal debt ceiling later this year.

“This is the start of a healthy dialogue,” White House budget director Shalanda Young told reporters on a morning conference call.

“We will see tax policies here that say to the richest Americans and the largest corporations … that you have to begin to pay your fair share,” she said.

But Young faced a grilling from journalists over criticism that hiking taxes could hurt the economy.

“Republicans will look at the $5.5 trillion in tax increases in this plan and say that those will hurt growth,” one said. “What would your response be on that growth question?”

Young said the changes would ensure that “we can continue to invest in working families in this country and we can continue to make sure the middle class can prosper all while being fiscally responsible, bringing down the deficit by nearly $3 trillion.”

Biden’s plan calls for raising the corporate tax rate to 28% (up from 21%) to raise $1.33 trillion over 10 years and for raising the top individual tax rate to 39.6% (up from 37%) and applying that rate to capital gains, raising an estimated $449 billion.

Another $1.17 trillion tax hike would come from applying a 25% minimum tax on people and families with a net worth of more than $100 million, a new 15% minimum corporate tax on billion-dollar companies and a quadrupling of stock-buyback taxes.

Another $549 billion would come from new taxes on international corporate profits and $30 billion from tax changes aimed at fossil fuel companies.

The budget intends to raise $650 billion by closing Medicare tax loopholes and raising the rate of Medicare taxes from 3.8% to 5% on incomes over $400,000.

Biden personally exploited a Medicare tax loophole to avoid paying up to $500,000 in taxes to fund the old-age health program by routing income from speaking fees and book profits through what’s known as an “S-corporation” in 2017 and 2018.

A reporter for The Post asked Young if Biden would reimburse the Treasury Department for Medicare taxes that he avoided paying, but she would not say.

“He has put forth a proposal, as you mentioned, to close loopholes that the wealthiest have exploited in order to not pay their fair share or anything close to it. So we’re gonna close those,” Young said, without addressing Biden’s own use.

“We make absolutely no apologies about putting these proposals forward because it’s the right thing to do,” Young added.

Although the budget projects nearly $3 trillion in deficit reduction over the next decade, the math is fuzzy and the document projects that the annual deficit actually would gradually increase from $1.38 trillion in fiscal 2022 to $1.9 trillion in fiscal 2025.

“We would not expect to continue to see large deficit reduction, year to year, just as we do not expect to see the rapid economic growth and job creation we saw in 2021,” Young said in response to a question about projections that deficits would increase despite claimed cuts.

“The goal here is to look at the trajectory we are on. With this president’s policies, what cannot be denied is overtaking your period we performed a pass to see nearly $3 trillion in deficit reduction.”

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