Is President Biden On the Right Track With His Billionaire and Business Tax Increase Plans?

The president said he would like to see the corporate tax rate rise to 28%, and what’s known as the corporate minimum tax rate increased to 21%. Biden also took aim at multinational corporations, looking to increase their tax rate to 21%. Other ideas included increasing taxes on stock buybacks, limiting CEO compensation and cracking down on tax loopholes for corporate jets.

The Wall Street Journal editorial board criticized the speech as partisan and said Biden villainized “the drug companies that care nothing for patients, the credit card companies that want to gouge consumers, the ‘big landlords who break antitrust laws by price-fixing’ and drive up rents, and more.”

Q: Is President Biden on the right track with his tax increase proposals?

Caroline Freund, UC San Diego School of Global Policy and Strategy

YES: Taxing the rich and big corporations more heavily to reduce soaring inequality while improving access to health care and education makes sense. But details matter, and the consequences for investment need more scrutiny. Moreover, passing this budget without control of Congress is a complete non-starter. The proposal is campaign talk—laudable goals but more extreme than appropriate or feasible.

Kelly Cunningham, San Diego Institute for Economic Research

NO: President Biden’s partisan attack would further lessen the economic prosperity his administration is already derailing. The economic costs of the proposed tax hikes on productive businesses would largely be borne by average Americans and workers. Corporations respond to higher taxes by increasing prices, holding back wages, reducing job creation, rather than absorbing the taxes themselves. The result is lower economic growth, fewer new business starts, and less job creation. Penalizing production does not increase a nation’s wealth.

Lynn Reaser, economist

YES: The 2017 tax cuts did stimulate investment but fell widely short of financing themselves. Fairness and equity argue for rebalancing. Raising the corporate tax rate to 28% and setting the minimum at 21% would be steps in that direction. Setting the foreign tax rate at 21% would align it with international standards. Retaining lower tax rates for those earning less than $400,000 while raising it above that threshold should move toward less income inequality.

Phil Blair, Manpower

YES: There is no reason for anyone to have hundreds of billions of dollars in net worth and not pay heavy taxes. So many people are struggling in the lower and middle classes every year that we need to consider some tax-leveler mechanism to spread all of that extremely excessive wealth around. I am specifically talking about additional taxes on $250 million of net worth and up.

Gary London, London Moeder Advisors

YES: SOTU proposals are always an aspirational candy store and are tempered over time and by an oppositional Congress. But I think that the various housing cost reduction proposals are crucial. Higher corporate taxes, billionaire minimum taxes, the chopping of loopholes and deficit cuts are among the most laudable ideas. Over the long term, there simply must be a plan for reducing the national debt.

Alan Gin, University of San Diego

YES: Data show that the federal budget deficit increased significantly after each of the tax cuts in the Reagan, George W. Bush and Trump administrations. Much of the benefits of those tax cuts went to those with higher incomes. At the same time, profits of corporations have surged even as (or because) they offshored millions of American jobs. So, if spending cuts are necessary to deal with the deficit, they should be accompanied by tax increases on those who have benefited from the previous tax cuts.

Bob Rauch, R.A. Rauch & Associates

NO: Raising taxes will dampen consumer spending and business investment, reducing disposable income. When this occurs, consumer confidence declines. Tax rates are already higher than needed to pay U.S. bills if we remove the pork, and raising them could make businesses less competitive internationally. Higher taxes deter entrepreneurship and innovation by reducing the financial rewards for taking risks and starting new ventures. This was a distribution of wealth preview of 2025—taxpayer beware.

James Hamilton, UC San Diego

NO: Corporate profits are either paid to the shareholders as dividends or are re-invested in the company. Since dividends are taxed directly as income of the shareholders, taxing corporate profits taxes the same income twice and takes away the funds that would otherwise be invested in America’s future. Investments paid for from corporate profits have brought us the information and communication revolution, electric cars, and drugs to help with obesity, Alzheimer’s and so many other crippling problems.

Austin Neudecker, Weave Growth

YES: President Biden’s tax proposals indicate a positive movement toward addressing economic inequalities and funding essential services. Measures like closing tax loopholes, enforcing the corporate minimum tax on multinationals, and funding Medicaid programs and the IRS are commendable. However, caution is warranted when pursuing other aspects such as raising the corporate tax rate and penalizing corporations for executive compensation. Striking the right balance is crucial for fostering economic growth while ensuring fairness in the tax system.

Chris Van Gorder, Scripps Health

NO: Increased taxes generally stifle growth, and slower growth will impact employment and jobs. It’s an understandable political position—tax companies and not voters—but those costs always get passed on to customers in the form of higher costs for them.

Jamie Moraga, Franklin Revere

NO: Increasing taxes isn’t the answer. The president must make hard decisions and reduce government spending but there isn’t the political will, especially in an election year. U.S. debt is an estimated $34 trillion and climbing. You can’t tax that debt away by targeting specific groups and corporations. These proposed tax increases can risk economic growth, make the tax code more complicated, and expand government spending. The national debt has grown by over $6 trillion since Biden took office. We must stop increasing taxes and instead cut out-of-control spending.

Norm Miller, University of San Diego

NO: We must be careful not to overtax large corporations or they will move to lower-tax nations. CEO pay at public firms has grown much faster than for average workers, but rather than tinker with capping rules, we could simply increase the marginal tax rate for the very highest earners. Residential landlords do not price-fix rents. They do charge what the market will bear, and they have many costs, like insurance, that are not capped. We are better off with less market interference, getting inflation and interest rates down and facilitating more housing supply.

David Ely, San Diego State University

NO: The president’s proposed budget would increase tax receipts, as a share of GDP, from 16.5% in 2023 to 20% by 2031. Federal spending as a share of GDP would also increase. While changes to the tax code are worth debating, we ought to be concerned about the federal government becoming a larger part of the economy. Also, a portion of the higher taxes collected from corporations will surely be passed on to consumers.

Ray Major, SANDAG

NO: Increasing taxes is not the solution to the economic woes the country is facing. Targeting multinational corporations and those who are successful is easy, but it doesn’t fix the real problem. The solution lies in cutting spending. Our current economic situation, with inflation still at twice the federal target, high interest rates, and unaffordable prices, largely results from trillions of dollars being pumped into the economy during the past four years. That is what caused the underlying problem.

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