In a bold move to reshape America’s fiscal landscape, President Joe Biden has unveiled his proposed budget for 2025, signaling a significant pivot towards supporting millions of American families, low-income workers, and senior citizens. This comprehensive proposal seeks to rejuvenate a program that played a pivotal role in alleviating child poverty during the pandemic’s peak.
Central to Biden’s fiscal strategy is the introduction of tax breaks, funded by increased taxes on corporations and the wealthiest Americans. A standout feature of this proposal is the reversal of a tax cut from the Trump administration’s 2017 Tax Cuts and Jobs Act, which predominantly lightened the tax load on businesses and the country’s wealthiest individuals.
As the cost of living continues to climb, the proposed tax breaks arrive at a critical moment for many Americans. A recent study by Northwestern Mutual reveals a startling insight: approximately one-third of households do not feel financially secure, marking the highest level of financial insecurity since the study’s inception in 2009.
Biden’s budget ambitiously aims to slash deficits by $3 trillion over the next decade, with the introduction of new taxes expected to generate $4.9 trillion. This revenue will not only fund the tax cuts for low- to middle-income families but also contribute to deficit reduction, according to the White House.
However, it’s important to note that presidential budgets serve more as a statement of priorities and political objectives than a guaranteed legislative path, especially with the current Republican control of the House rendering the 2025 budget’s passage highly unlikely. Despite this, the budget outlines Biden’s priorities and indicates the tax changes he would pursue if re-elected in November.
Among the noteworthy tax policies in the proposed budget is the revival of the expanded Child Tax Credit (CTC), which underwent a significant overhaul in 2021 during the COVID-19 crisis. This expansion provided families with up to $3,600 per child and delivered half of the credit in monthly installments, offering immediate relief to millions of families and significantly reducing child poverty. The Biden budget seeks to restore the expanded CTC to its pandemic-era levels.
Additionally, the budget proposes an expansion of the Earned Income Tax Credit (EITC) to benefit more low-wage workers without children and older Americans, potentially reducing taxes by an average of $800 for 19 million individuals and couples.
Other key proposals include creating a new program to ensure affordable child care, establishing free preschool for all 4-year-olds, offering $10,000 tax credits to first-time homebuyers and those in starter homes, and making permanent the expanded premium tax credits for health insurance through the Affordable Care Act’s marketplaces.
To finance these ambitious proposals, the Biden administration plans to increase taxes on high-income Americans and corporations, emphasizing that individuals earning less than $400,000 will not face higher taxes. This includes raising the corporate tax rate to 28%, imposing a minimum tax rate of 25% on billionaires, and increasing the highest individual income tax rate to 39.6%.
As the nation anticipates the potential impact of these proposals, it’s clear that Biden’s budget represents a significant effort to prioritize the needs of working families and address the ongoing challenges of economic inequality.