Joe Biden to revive plan for billionaire tax in State of the Union address

US President Joe Biden will take aim at Wall Street and corporate America in his annual State of the Union address on Tuesday, reviving his plan for a tax on billionaires and calling on Congress to quadruple the levy on share buybacks.

Previewing the economic portions of Biden’s speech, the White House said the president would tout the strength of recovery in the labour market and his efforts to reduce inflation, while calling for deficit reduction “through additional reforms to ensure the wealthy and largest corporations pay their fair share”.

Biden’s call for higher taxes on high-income households and big business has had only limited success over the past two years, when Democrats controlled both chambers of Congress, and will face even more resistance with a Republican-controlled House of Representatives.

But fiscal policy will be a crucial political battleground over the next few months as Biden tries to secure an increase in the US debt limit from congressional Republicans to avoid a damaging default on America’s financial obligations.

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While Republicans are expected to demand deep spending cuts in exchange for raising the borrowing limit, Biden is expected to counter that the burden of fiscal responsibility should be shouldered by corporations and the very wealthy.

The newest proposal that Biden will unveil on Tuesday is the quadrupling of the 1 per cent excise tax on share buybacks, which was passed as part of last year’s Inflation Reduction Act (IRA), and staunchly opposed by business. Biden administration officials have frequently blasted companies, including oil groups, for returning money to shareholders through buybacks rather than investing them in their communities or rewarding workers.

Biden will also reprise his attempt to enact a tax on billionaires’ unrealised investment gains, which he had championed throughout 2022 but failed to secure in the final round of negotiations over the IRA following a backlash from some Republicans and moderate Democrats.

In addition, he will call on Congress to extend a cap on insulin costs to all Americans after the IRA approved it only for seniors through the Medicare government healthcare scheme.

The proposals are part of Biden’s efforts to double down and defend his economic policies, which have delivered huge jobs growth but also high inflation, as polls show Americans disapprove of his handling of the economy.

Brian Deese, the director of the National Economic Council at the White House, told reporters on Monday that the administration had already defied predictions of a recession, giving it confidence in its plans.

“We’ve seen inflation come down. We’ve seen the labour market remain resilient,” he said, adding that the White House would “redouble our efforts to actually implement a policy agenda that we know and we have seen has really helped to bring this progress along”.

Biden is also expected to promote the vast subsidies to infrastructure, advanced manufacturing and clean energy passed throughout his presidency in different pieces of legislation.

“We have spurred more than $700bn in announced private investment in manufacturing, utilities and energy from more than 200 companies in all 50 states,” the White House said on Monday.

Biden’s industrial subsidies have generated a sharp backlash among some of America’s closest allies, particularly in Europe, who fear the measures will siphon investment away from their countries. But Deese said Europe and other allies had “nothing to fear” and “quite a bit to gain” from the plans, since the US efforts would end up cutting the cost of clean energy technologies that are “critical for the world”.

“We have nothing to apologise [for] and, frankly, everything to be proud about that.”

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