Factbox-What’s in Biden’s budget: taxes on buybacks, rail safety, childcare By Reuters

© Reuters. FILE PHOTO: U.S. President Joe Biden speaks to the news media after attending a closed Senate Democratic Caucus lunch at the U.S. Capitol in Washington, D.C., U.S., March 2, 2023. REUTERS/Leah Millis

WASHINGTON (Reuters) – U.S. President Joe Biden’s budget for fiscal 2024 will be released Thursday. While the document is always a bit of a wish list, and especially so given the current divided Congress, the Democratic president’s spending and revenue priorities will be key factors in upcoming negotiations with Republicans over raising the debt ceiling.

Here’s what to expect:

Cutting nearly $3 trillion from the national deficit

Biden will double down on a State of the Union pledge to trim the national deficit, promising to cut almost $3 trillion over 10 years, with tax hikes on companies and high earners.

The U.S. federal deficit totaled $1.4 trillion in 2023, the Congressional Budget Office said.

Boosting Medicare with taxes

Biden hopes to raise the Medicare tax on income above $400,000 from 3.8% to 5%, and expand the federal government’s ability to negotiate drug prices to keep the healthcare program solvent, the White House said this week.

The White House wants Congress to give the administration permission to negotiate prices on more drugs with manufacturers and to let those negotiations start sooner after drugs come to market. The budget would also require commercial health insurance plans to provide rebates when some drug prices increase faster than the rate of inflation.

Buybacks

Biden plans to propose quadrupling the 1% tax on stock buybacks that took effect in January, to encourage companies to invest in their growth instead of boosting shareholders.

The White House has said taxing buybacks levels a distortion in the tax system. Dividends, it said, are taxable for many shareholders but share buybacks weren’t taxable until this year. The plan to boost the buyback tax may struggle to move through the U.S. Congress where Republicans control the House.

Childcare, tax credits

Biden will re-up a provision of his 2021 COVID plan that expanded the child tax credit to lower-income families, and reintroduce plans for federal funding for universal pre-kindergarten.

Rail safety

The budget is expected to include millions in new funding for railroad safety measures after a series of high-profile accidents and derailments.

Billionaire minimum income tax

Biden is expected to reiterate his call for a 20% minimum tax on households worth more than $100 million. The White House refers to it as the “billionaire minimum income tax.”

The tax would make sure the wealthiest of Americans do not pay a tax rate lower than firefighters and teachers, Biden said in his budget proposal last year. Several past attempts by Democrats to push such a proposal has failed to move forward in Congress.

Defense spending

The White House is also expected to request hiking the defense budget by single-digit percentages from the $816 billion allocated this year, according to a person familiar with the matter.