Brainard Calls for Higher Corporate Taxes, Differing From GOP Ahead of 2024 Election

Lael Brainard, Director of the White House National Economic Council, advocates for higher taxes on corporations and the ultra-wealthy to support the middle class. President Joe Biden proposes raising the federal corporate tax rate to 28% and extending middle-class tax cuts, contrasting with former President Trump's tax policies.

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Bijay Laxmi
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Brainard Calls for Higher Corporate Taxes, Differing From GOP Ahead of 2024 Election

Brainard Calls for Higher Corporate Taxes, Differing From GOP Ahead of 2024 Election

Lael Brainard, Director of the WhiteHouse National Economic Council, is advocating for higher taxes on corporations and the ultra-wealthy to support the middle class, marking a stark contrast with Republicans ahead of the 2024 presidential election. In a speech at the Brookings Institution on May 10, Brainard emphasized the need to reverse former President Donald Trump's corporate tax cuts and scale back permanent corporate tax breaks.

Why this matters: The debate over corporate tax rates has significant implications for the US economy and the distribution of wealth, with potential consequences for economic growth, job creation, and income inequality. The outcome of this debate could shape the country's fiscal policy and budget priorities for years to come.

Brainard stated, "It's clear we need to end the 2017 tax breaks for the ultra-wealthy and scale back costly permanent corporate tax breaks. Our tax system currently asks much less of corporations than it used to." President Joe Biden has proposed raising the federal corporate tax rate to 28%, up from the current 21% in Trump's tax law, but lower than the previous level of 35%.

The expiration of nearly $4 trillion in tax cuts, signed into law by Trump in 2017, is set to occur next year. Individual tax cuts are set to expire at the end of 2025, meaning taxpayers at all income levels would face a levy increase unless Congress acts. Restrictions on the estate tax and a deduction for business owners, which have been criticized for skewing tax benefits to high-earners, are also set to expire in 2025.

Biden wants to extend middle-class tax cuts while raising taxes on highly profitable companies and the richest Americans. Brainard emphasized, "Any outcome that does not preserve the current tax breaks for the middle class is one that the president wouldn't be able to accept." The president has pledged to not raise taxes on any household making less than $400,000 a year and supports renewing tax cuts for those earning under that threshold, offsetting the costs with more taxes on the wealthy and businesses.

Trump argues thattax increaseswould destroy the U.S. economy, stating,"Biden wants to raise taxes on top of that inflation and raise business taxes, which will lead to the destruction of your jobs and you know what, ultimately it's just going to lead to the destruction of the country. "In contrast, Biden believes growth stems from spending and saving by middle-class households.

If all the tax cuts are extended, an additional $4.6 trillion, including the cost of debt service, would be added to the national debt over the next decade, according to the Congressional Budget Office. Trump's 2017 tax overhaul cut the corporate tax rate to 21% and temporarily cut income taxes paid by most U.S. households. The nonpartisan Tax Policy Center estimated that a family in the 40th to 60th percentile of earners would save $930 annually, while someone in the top 1% would get back $51,140 and those in the top 0.1% would save $193,380.

As the 2024 presidential election approaches, thetax policiesof President Biden and former President Trump are likely to gain further attention. Policymakers are bracing for a major tax negotiation next year, regardless of the outcome of the November elections. Brainard's speech at the Brookings Institution highlights the administration's stance on addressing the fiscal hole created by Republican tax cuts and raising revenue overall by asking corporations and the ultra-wealthy to pay their fair share.