Directly addressing some of the practices wealthy corporations increasingly use to line their pockets while working Americans face rising costs of living, U.S. President Joe Biden on Thursday night won praise from economic justice advocates for presenting "a clear and compelling vision" that contrasted sharply with Republicans' push to further cut taxes for the rich.
The president's State of the Union address came days after The Washington Post reported that progressive U.S. Sen. Bernie Sanders (I-Vt.) pushed Biden in a private meeting last fall to acknowledge Americans' continuing economic struggles during his reelection campaign and tell voters what he plans to do to help.
Instead of focusing only on his accomplishments, the president directly called out corporations' unfair practices and the Republicans who have ensured some of the richest companies pay nothing in federal income taxes.
Biden noted that the Republican Party joined former President Donald Trump in pushing through a $2 trillion tax cut for the wealthy and is currently working to make those cuts permanent.
Instead, said Biden, "it's time to raise the corporate minimum tax to at least 21% so every big corporation finally begins to pay their fair share."
According to a recent analysis by the Institute on Taxation and Economic Policy (ITEP), 342 of the country's most profitable companies paid an average effective tax rate of just 14.1% from 2018-22—the first five years of the Trump-GOP tax law.
ITEP called Biden's proposal to raise the minimum tax for corporations "an important step forward from the status quo" that could "raise substantial revenue."
The president added that he would end tax breaks for CEOs, and as he delivered his address the White House released a fact sheet on his plan to "invest in America by making big corporations and the wealthy pay their fair share," including by:
- Raising the corporate tax rate to 28%;
- Denying corporations a tax deduction when they pay any employee over $1 million in order to crack down on tax breaks for exorbitant CEO pay;
- Quadrupling the stock buyback tax from 1% to 4% to disincentivize companies using their profits to lavish their shareholders instead of paying their employees;
- Requiring billionaires to pay at least 25% of their income in taxes, up from just 8% currently; and
- Protecting the Internal Revenue Service's ability to crack down on tax avoidance by wealthy people.
Roughly 1,000 American billionaires pay "far less than the vast majority of Americans pay" in taxes, said the president. "No billionaire should pay a lower federal tax rate than a teacher, a sanitation worker, or a nurse."
Raising billionaires' income taxes to 25% would raise $500 billion over the next decade, he said, allowing the government to guarantee affordable childcare, paid leave, and other programs that already exist in other wealthy countries.
"Imagine a future with affordable childcare," said Biden. "Imagine a future with paid leave because no one should have to choose between working and taking care of a sick family member."
Biden made clear to Americans watching that he would "create the kind of America we all want to see" by ensuring that "large, profitable corporations and the wealthy pay their share," said Amy Hanauer, executive director of ITEP. "As the president's tax agenda makes clear, we can strengthen this country's communities, care for all our people, and restore balance to our tax system. Our lawmakers just need to find the will to do it."
Republicans appeared to acknowledge the unpopularity of their own plan to slash Social Security and permanently cut taxes for the rich when they groaned and booed at Biden's mention of their agenda.
"You guys don't want another $2 trillion tax cut?" Biden asked, drawing applause and laughter from Democrats. "I kind of thought that's what your plan was. Well, that's good to hear."
In addition to taking aim at corporate tax dodging, the president pointed to a corporate practice that's become increasingly common since the coronavirus pandemic: "shrinkflation," which involves companies reducing the size of a product while charging the same amount.
With a White House "strike force," Biden said his administration is "cracking down on corporations that engage in price-gouging and deceptive pricing, from food to healthcare to housing."
"Tonight, President Biden detailed a clear, decisive plan to take on corporate greed in order to reduce costs and to reestablish a progressive tax system where the wealthy and corporations pay their fair share," said Lindsay Owens, executive director of Groundwork Collaborative and the author of a report on shrinkflation that was published this week.
"The president's commitment to improving the lives of working people and families," Owens said, "stands in sharp contrast to lawmakers looking to protect excessive corporate profits and deliver another tax break to the rich."
