Tax Increases in Biden Budget Unlikely to Become Law

Tax increases that President Joe Biden will include in his budget request to Congress later this week are unlikely to become law.

Republicans control the House of Representatives and are highly unlikely to approve legislation that includes Biden’s tax increases. Without passage in the House, legislation cannot become law.

President Biden is expected to release his budget request on March 9^th. Early on March 7^th, the White House unveiled a portion of the tax increases that Biden will include in his budget that would lengthen the life of Medicare.

Tax increases include:

• Increase the Medicare tax rate from 3.8 percent to 5 percent for incomes over $400,000.
• Ensure that high income taxpayers pay the Medicare tax on all their income.

Biden has also recently said that his budget would propose other tax increases for taxpayers earning more than $400,000 a year.

House Republicans are not expected to pass any of these tax increases.

In fact, House Republicans are expected to pass legislation from their chamber that extends all tax cuts enacted in 2017.  Biden and congressional Democrats agree that tax cuts for taxpayers earning less than $400,000 should be extended. This means that the only political disagreement is over what people earning over $400,000 should pay in taxes.

If past is prologue, tax increases could lose-out to extending tax cuts. In 2010, congressional Democrats faced a similar situation and opted to extend tax breaks for everyone instead of allowing to expire the ones affecting high-income earners.