Last night’s State of the Union address likely marked President Biden’s final first-term speech to Congress, doubling as his inaugural major-stage event for re-election campaigning.
Particularly on tax policy, Biden made his intentions clear: His second-term fiscal agenda would mirror his first, focusing on raising taxes for corporations and the wealthy while providing tax relief for households earning $400,000 or less annually.
In stark contrast, Biden’s presumed opponent, Donald Trump, has been vague about his fiscal plans. Biden is poised to highlight this contrast for the next seven months, reiterating his address’s core message: “Does anybody really think the tax code is fair? Do you really think the wealthy and big corporations need another $2 trillion in tax breaks?”
Joe Biden (Credits: Tax Policy Center)
Biden’s tax agenda, as outlined in his speech and accompanying fact sheet, largely reprises or expands upon his first-term initiatives. He intends to implement the international agreement for a 21 percent corporate minimum tax, increase taxes on corporate stock buybacks, expand executive compensation limits, and more.
He also aims to restore the more generous 2021 Child Tax Credit, increase the Earned Income Tax Credit, and create a first-time homebuyers tax credit.
Contrasting his tax agenda with Trump’s is challenging, as Trump has been reticent about his fiscal plans. Initially, Trump proposed deeper corporate tax cuts and new tariffs, but he later focused on making the Tax Cuts and Jobs Act (TCJA) permanent. Biden’s plan contrasts starkly with Trump’s, favoring a 28 percent corporate tax rate and international tax reform.
While Biden reiterated many past ideas, he omitted others, such as taxing accrued capital gains and taxing capital gains on unsold assets at death. He also did not address extending the solvency of Social Security, an effort that would require payroll tax increases.
Joe Biden (Credits: WJHL)
Some of Biden’s proposals may serve more as political messages than revenue-raising tools. For instance, while increasing the excise tax on stock buybacks may deter some, it might not significantly change behavior.
Similarly, capping corporate tax deductions for non-executive employee compensation may have limited impact due to its narrow application.
In an election year with a divided Congress, passing these changes seems unlikely. Nevertheless, Biden’s speech was aimed more at 2024 voters than lawmakers, setting the stage for a spirited campaign.
