U.S. Treasury Secretary Janet Yellen testifies before a Senate Finance Committee hearing on the 2025 budget on Capitol Hill in Washington, U.S., March 21, 2024.
Elizabeth Frantz | Reuters
WASHINGTON – Treasury Secretary Janet Yellen on Thursday defended President Joe Biden’s 2025 budget proposal as Republican senators said they feared taxes on the middle class would rise under a law that expires next year.
“For years, President Biden has promised no tax increase on people making less than $400,000,” Sen. Steve Daines, R-Mont., said during a Senate Finance Committee hearing where Yellen testified.
“And now President Biden is choosing to phase out the Tax Cuts and Jobs Act and increase the corporate tax rate, forcing American families and workers to bear the costs of these ‘woke’ policies,” Daines said, referring to the guidelines for clean energy as part of the 2022 Inflation Reduction Act.
Among the provisions of the TCJA — a landmark tax law proposed by the Trump administration and passed by Congress in 2017 — that is set to expire in 2025 is the child tax credit.
This credit allows taxpayers to reduce their tax bill by up to $2,000 per eligible child, with an income limit of up to $400,000 per family. An additional “Other Family Credit” provides a $500 tax credit to individuals earning less than $400,000 and qualifying dependents who do not qualify for the child tax credit.
Biden’s budget will restore the expanded child tax credit, the White House said.
“Would you agree that not extending the TCJA child tax credit provisions would also result in a tax increase on Americans earning less than $400,000?” Sen. Mike Crapo, R-Idaho, the committee’s ranking member, Yellen asked.
Yellen said Biden was “committed to not raising taxes on households earning less than $400,000” and “championed the importance of the child tax credit, which has dramatically reduced child poverty.”
According to the National Conference of State Legislatures, the TCJA doubled the existing child tax credit to $2,000, and the 2021 American Rescue Plan temporarily increased the credit amount by $1,000 to $1,600 during the pandemic.
The credit helped reduce the child poverty rate by 46% in 2021, from 9.7% in 2020 to 5.2% in 2021 – the lowest rate ever recorded, according to the U.S. Census Bureau.
Biden’s $7.3 trillion spending proposal aims to reduce the federal deficit by $3 trillion over the next decade without raising taxes on Americans making less than $400,000.
The budget would impose a 25% minimum tax rate on the unrealized income of the wealthiest households and increase the IRA alternative minimum corporate tax for billion-dollar companies from 15% to 21%, while increasing the higher corporate tax rate to 28%.
House Republicans sought to cut the deficit by about $14 trillion over the next decade through cuts to the Inflation Reduction Act and a separate budget resolution introduced in early March.
Six months into the fiscal year, lawmakers still haven’t agreed on a permanent budget, despite reaching an agreement this week on funding for the Department of Homeland Security. It is the latest in a series of funding bills that must be considered before a Saturday deadline to avert a government shutdown.
Source link
2024-03-21 21:19:04
www.cnbc.com