WASHINGTON, March 12 — President Joe Biden’s proposed US government budget would raise tax receipts by US$4.951 trillion over 10 years, including more than US$2.7 trillion in tax hikes on businesses and nearly US$2 trillion on wealthy individuals and estates, the US Treasury said yesterday.

The budget plan also calls for an additional US$104.3 billion in mandatory funding for the Internal Revenue Service on top of US$80 billion won by the tax agency in 2022, the Treasury said in its "Green Book” estimates of the budget’s revenue effects.

This additional funding would add US$341 billion in new revenues over the 10-year period compared with current funding, the Treasury said.

The tax increases are part of Biden’s election-year budget wish list, which also includes new programmes to assist low — and middle-income Americans with high housing and childcare costs and aims to cut the deficit. Congress is likely to discard the proposals, but the document forms a central campaign message for Biden.

Plugging shortfalls

The Treasury estimated that reforms to international business taxation, driven by implementation of a 2021 global 15 per cent minimum tax deal by 137 countries, would add US$632.2 billion to US receipts over 10 years. But even with the addition of a higher US overseas minimum tax of 21 per cent, this is well below last year’s estimate of about US$1.16 trillion.

A US Treasury official told reporters the reduction was due to revised assumptions that fewer countries would adopt the minimum tax apart from Britain, Japan, the European Union, Mauritius and Vietnam.

The reduction was made up elsewhere, including through an increase in the domestic large-company minimum tax to 21 per cent from 15 per cent, which the Treasury estimates would raise US$137.4 billion over 10 years. It estimates that a new proposed ban on companies’ ability to deduct non-CEO and CFO employee compensation above US$1 million would raise US$271.9 billion over 10 years.

Elimination of tax breaks for fossil fuel energy companies would raise US$45.1 billion in new revenues over the decade through 2034, while raising the overall corporate tax rate to 28 per cent from 21 per cent would raise US$1.35 trillion, Treasury estimated.

Tax the rich

The Treasury estimated that provisions to raise taxes on wealthy individuals, new rules for estate transfers, and limiting high-income individuals’ use of tax-advantaged retirement accounts would raise US$1.96 trillion.

That total includes Biden’s "billionaire tax,” which would impose a 25 per cent minimum tax on individuals with wealth of over US$100 million. The Treasury estimated it would raise US$502 billion over the decade.

The Treasury again proposed more funding for the IRS to conduct more audits of wealthy individuals and complex business partnerships. The Treasury has recently increased its internal estimates of the revenues that could be collected from the IRS modernisation efforts.

The budget also includes a number of new proposals to help Americans cope with the high cost of housing, including a US$10,000 tax credit over two years to help offset high interest costs for first-time homebuyers and a one-time US$10,000 credit for sellers of "starter homes” to increase market inventory.

Together these would cost US$47.3 billion over the 10-year period, the Treasury said.

The budget’s overall tax proposals to assist moderate-income families, including the housing credits and expanded tax credits for children and health insurance premiums, would cost US$764.9 billion over 10 years, the Treasury said. — Reuters