If President Joe Biden gets his way, Americans who receive a child tax credit will see larger returns next tax season.
In the budget released Thursday, President Biden is proposing raising the child tax credit from $2,000 per child to $3,000 per child for children 6 years old and above, and to $3,600 per child for children under 6. Parents received an expanded child tax credit in 2021 as part of pandemic relief, but the credit lapsed despite efforts among Democrats.
The budget calls on providing universal, free preschool nationwide. It also wants to implement 12 weeks of paid family leave.
The budget includes $885 billion in defense spending.
President Biden is proposing to increase the Medicare tax rate from 3.8% to 5% for those earning $400,000 a year or more. The budget would also expand how Medicare negotiates prices for more drugs and bring drugs into negotiation sooner after they launch.
The budget includes $59 billion in mandatory funding and tax incentives aimed at increasing the affordable housing supply, the White House said.
President Biden is also calling for a $500 per student increase to the Pell Grant. The budget would also expand free community college tuition.
The annual budget is an outline of the president’s goals and initiatives.
After the president presents the annual budget, it goes to various House and Senate committees for markups. While the president is obligated to present a full budget, there are normally many changes, and that’s assuming a full budget is passed.
The House and Senate are not under any obligation to pass a budget and could opt to pass a continuing resolution instead.
Immediately after President Biden released his proposed budget, Republican lawmakers immediately came out opposed to it.
“Despite the federal government collecting as much in taxes from American families as at any point in our history, federal spending is rising even faster and our debt is soaring, burdening hardworking families across America,” said Speaker Kevin McCarthy. “For every dollar the federal government takes in, we spend $1.29. Under CBO’s new projection, that number will go up to average $1.34 over the next ten years. This is a spending problem, not a revenue problem. Yet President Biden’s unserious budget proposal includes trillions in new taxes that families will pay directly or through higher costs.”
Deficit reduced by taxing the wealthy
The White House said that President Biden’s budget would reduce the federal deficit by $3 trillion over 10 years. To help reduce the deficit, President Biden is proposing a 25 percent minimum tax on the wealthiest 0.01 percent.
The budget would set the corporate tax rate at 28 percent, which the White House notes is below the 35 percent rate that prevailed prior to the 2017 tax law. The budget also proposes quadrupling the stock buyback tax from one percent to four percent.
The White House says that taxes will not go up for those earning $400,000 or less a year.
“We see this as a value statement on what the president sees in the future of this country,” said White House press secretary Karine Jean-Pierre. “And so, he wanted to make sure it was fiscally responsible.”