Treasury Secretary Janet Yellen defended President Biden's budget proposal on Thursday, which includes raising taxes for the richest Americans and expanding the child tax credit.
At a Senate Finance Committee hearing on the president’s budget proposal, Yellen also stated that the Biden administration will continue to oppose ideas that will increase the deficit by giving large tax breaks to the wealthy and big corporations, leading to a partisan tax policy battle that will be important in the 2024 election.
In a vast $7.3 trillion budget request for fiscal year 2025 revealed earlier this month, Biden suggested raising the corporate minimum tax rate to 28 percent from the 21 percent rate set by former President Trump’s 2017 Tax Cuts and Jobs Act (TCJA).
Key parts of that law are scheduled to expire in 2025, and Republicans want to extend the cuts.
During the hearing, Republicans cautioned that increasing the corporate minimum tax rate could drive money overseas, contribute to inflation, and lower wages.
Biden’s budget proposal includes a minimum tax of at least 25 percent on the total income of people with wealth over $100 million, which Yellen described as the “wealthiest one-hundredth of a percent of taxpayers.”
When questioned by Republicans on how the President’s plan would affect households earning less than $400,000, Yellen reiterated the president’s support for extending income-tax reductions for those households.
“The president has made clear he would oppose raising back the taxes for working class people and families making under $400,000,” Yellen said.
Senator Bill Cassidy (R-La.) criticized the president’s proposal as “a series of talking points” and questioned Biden’s commitment to working with Republicans he “continually demagogue[s].”
While Biden’s proposal is effectively dead on arrival in Congress, it sets a clear contrast between Biden and Trump, who clinched the GOP nomination last week.
Senator Ron Wyden (D-Ore.), the committee chairman, characterized Trump’s pitch in the presidential election as “more tax breaks for multinational corporations and big handouts for those at the very, very top.”
Senator Mike Crapo (R-Idaho), ranking member of the Senate Finance Committee, also outlined the sharp difference to the Republican’s objective of lower taxes and competitive rates across the board, describing Biden’s platform as one of “higher taxes and uncompetitive rates for the majority to support government subsidies for a few.”
Biden has been struggling with disappointing poll numbers and facing criticism of his handling of the economy.
A recent CBS News/YouGov poll of 2,159 Americans found 61 percent disapproved of how Biden is handling the economy. This is in spite of the fact that the economy has defied predictions of a recession last year, and pandemic-induced inflation has decreased significantly while unemployment remains low and economic growth has stayed strong even in the face of high borrowing costs.
Biden’s approval rating is around 43 percent, as per polling averages examined by The Hill and Decision Desk HQ, which also indicate that Trump currently holds a 1 percent lead over the president.
While Yellen complimented the Biden administration’s “historic economic recovery,” she stated that the administration acknowledges that high prices continue to be a burden for many families.
“Overall, the budget will allow us to keep growing our economy and supporting workers and families while maintaining our commitment to fiscal responsibility and reducing the deficit,” Yellen stated.
