The U.S. President’s Budget, released on Monday, sets an ambitious target to significantly curb the vast federal deficit, proposing a cumulative reduction of about $3 trillion compared to projections by the Congressional Budget Office (CBO).

Central to achieving this reduction are higher taxes on major corporations and the wealthiest individuals, reallocating these funds to make health care, child care and housing more affordable for American families.

Key Highlights From The President’s Budget:

• Minimum Tax Increase For Top 0.01%: The Budget seeks to increase the minimum tax rate from 8% to 25% on the wealthiest 0.01% of individuals, targeting those with a wealth exceeding $100 million.
• Tax Reform Initiatives: It proposes the repeal of tax cuts for the wealthiest Americans, introduced under the Trump administration, restoring the top tax rate to 39.6% for individuals earning more than $400,000 annually. Additionally, it aims to align the taxation of capital gains with that of wage income for individuals earning over $1 million.
• Corporate Tax Rate Adjustment: The corporate tax rate is set to rise to 28%, up from the current 21%.
• Large Corporations Tax Rates: Further, the Budget plans to increase the Inflation Reduction Act's corporate alternative minimum tax rate from 15% to 21% for billion-dollar corporations, reinforcing the principle that the most significant corporations should contribute a fairer share.
• International Tax Reforms: Efforts include reforming the international tax system to discourage profit-shifting to low-tax jurisdictions, preventing corporate inversions to tax havens, and doubling the tax rate on U.S. multinationals' foreign earnings from 10.5% to 21%.

President Joe Biden emphasized the Budget’s intention to “do more to close loopholes,” indicating an ongoing effort to ensure tax equity.

The spending strategy outlined in the budget focuses on substantial support for working families, health care affordability, and housing cost reduction:

• Child care Program: A landmark program guarantees affordable, high-quality child care for families earning up to $200,000, with costs capped at $10 a day for most families and zero for the lowest-income groups.
• Medicare Prescription Cap: Caps annual out-of-pocket prescription drug expenses for seniors on Medicare at $2,000, covering even costly cancer treatments.
• Mortgage Relief: Offers a $5,000 annual mortgage relief credit for two years to middle-class first-time homebuyers, aiming to make homeownership more attainable.

Biden remarked on the need to alleviate housing costs for “too many hardworking families” and pledged efforts to “lower costs and boost supply of housing nationwide.”

Moreover, the budget reaffirms the U.S.’s commitment to supporting Ukraine and NATO allies.

The Budget In Numbers:

• The fiscal year 2025 deficit is projected at $1.781 trillion, 6.1% of GDP.
• White House budget estimates show a cumulative deficit of $16.297 trillion for the next 10 years, a reduction from the CBO’s forecast of $20.016 trillion. Proposals aim to cut the fiscal deficit by $3.227 trillion over the same period.
• The budget deficit is expected to average 4.6% of GDP from 2025 to 2034.
• Public debt is forecasted to rise to 102.2% of GDP in 2025, up from 97.3% in 2023, reaching 105.6% by 2034.
• Tax reforms targeting corporations are anticipated to bring in $2.164 trillion in revenue, with an increase in the corporate income tax rate to 28% generating $1.350 trillion.
• Tax reforms for the wealthiest Americans are expected to generate $1.4 trillion, with the minimum income tax and new capital income tax projected to bring in $503 billion and $289 billion, respectively, by 2034.
• Closing Medicare tax loopholes and increasing the Medicare tax for those making over $400,000 is forecasted to yield $797 billion in revenues.
• Major spending focuses include $1.354 trillion on healthcare and support for working families, with $600 billion for child care access, $470 billion for health care cost reduction, and $183 billion for housing cost reduction over the next decade.

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