Biden budget plan calls for raising stock buyback, capital gains, corporate taxes

President Joe Biden on Thursday unveiled his proposed fiscal year 2024 budget that includes measures to quadruple the tax on stock buybacks, raise the corporate tax rate, tax capital gains at the same rate as income for households with more than $1 million in income and close the "carried interest loophole" for private fund managers.

The president's $6.8 trillion budget plan, which the White House said would lower costs for American families, strengthen Medicare and Social Security and reduce the federal deficit by nearly $3 trillion over the next decade, among other items, faces little chance of passing in a divided Congress.

But Mr. Biden's budget blueprint calls for several changes in the tax code that he outlined in his State of the Union address last month.

Notably, the president is calling for the tax on stock buybacks to be raised to 4% from 1% in order to encourage long-term investments. Democrats in August passed the Inflation Reduction Act of 2022, a major climate, health care and spending bill, that included provisions that established a 15% minimum corporate tax rate and levied a 1% excise tax on stock buybacks.

Mr. Biden would also like to raise the corporate tax rate to 28% from 21%.

Moreover, the president's budget calls for restoring the top tax rate of 39.6% for single filers making more than $400,000 a year and married couples making more than $450,000 per year and taxing capital gains at that 39.6% rate for households with more than $1 million in income.

On carried interest, Mr. Biden is renewing his call to close the "carried interest loophole," which the White House said in its announcement Thursday "allows some wealthy investment fund managers to pay tax at lower rates than their secretaries."

Currently, the carried interest deduction treats income flowing to a private fund's general partner as capital gains, which are subjected to a lower tax rate — capped at 20% — as opposed to the top individual income tax bracket — 37%.

House Republicans will unveil a budget proposal of their own this year that will assuredly have different priorities. Shortly after Mr. Biden's budget proposal was published Thursday, House Speaker Kevin McCarthy, R-Calif., tweeted that the president "proposes trillions in new taxes that you and your family will pay directly or through higher costs. Mr. President: Washington has a spending problem, NOT a revenue problem."

Congressional Republicans have said they will not raise the debt ceiling without structural spending reform that reduces deficit spending.

The debt limit or debt ceiling — the terms are used interchangeably — is a cap on the money the U.S. government can borrow to pay its bills. It does not authorize any new spending, but it allows the Treasury Department to finance the existing legal obligations already approved by Congress.

The federal government hit its statutory debt limit in January, and the Congressional Budget Office projects the government's ability to pay the country's bills will run out between July and September.