The Accidental Tax Cutter in Chief

from New York Times I'm Michael babo. this is the. [Music]. daily. today in his campaign for reelection. President Biden says that raising taxes. is at the heart of his. agenda but as it turns out so far he's. done the opposite as president my. colleague Jim tankersley.

explains it's Wednesday April. [Music]. 3rd Jim welcome back we haven't seen you. since State of the Union always a. pleasure so so great to be here and uh. yeah I finally recovered from staying up. all night with you guys yeah you don't. even know all night you stopped and we. kept going it's true I did I got a I got. a robust three hours that night you're. right so Jim in your capacity.

as really the chief economic thinker. covering this President you recently. came across something very surprising. yeah it started with a pretty basic. question for me I I like to do this. crazy thing Michael where I like to take. candidates promises and see if they've. come true insane it's a little bit wild. but it's it's what I do for fun and in. this case I wanted to look at a very. Central promise of President Biden's. campaign in 2020 which he has reped.

while in office I promise you I. guarantee you we can build back and. build back better with the economy the. rewards work not wealth the promise was. he was going to raise taxes but I tell. you what I'm going to do and I make no. apologies for it I'm going to ask the. wealthiest Americans and the biggest. corporations of the Fortune 500. companies. 91 making a collective billions of. dollars didn't pay a single solitary. penny in tax not taxes on the middle.

class not taxes on low-income workers. but he was going to raise taxes on. corporations and the rich but I'm going. to make sure they pay their fair share. he was going to make them pay their fair. share and he leaned into it guess what. you're going to start paying your fair. share I'm going to ask him to finally. begin to pay the fair share not a. punishment pay your fair share he said. it over and over fair share translation. it's back to the failed policies of the.

1970s Republicans loved this they. repeated it too they told voters that. the president was going to raise taxes. Joe Biden bragging about raising taxes. on corporations that means less money. for those very employers to hire people. back they talked about you know all the. ways in which corporate tax increases. could rebound on workers Joe Biden will. shut down your economy raise taxes want. a $4 trillion tax increase he's the only. politician I've ever seen who said we.

will raise your taxes you're supposed to. it was a very big part of the economic. debate for the campaign right and I. wanted to know is that true has that. actually played out in the policy agenda. the president has had mhm so I asked. some economists at the tax policy Center. in Washington to run an analysis and. just say let's look at all of the ways. Biden has changed the tax code in all of. those laws he signed and ask has he.

raised taxes as president and it turns. out the answer is he has not raised. taxes on net he has cut more taxes than. he's raised how much more has he cut. taxes than raised them so by the math. that economists use when they look at. budgets the traditional way of scoring. tax changes he has cut taxes by $600. billion on net hm a lot of money a lot.

of tax cuts it's a lot of tax cuts the. president has been a net tax cutter so. Jim why and how did Biden end up cutting. taxes especially if his stated intent. was to raise taxes well there's two. sides of this equation and sort of two. complimentary explanations for what's. happened here the first side is the tax. increases that Biden ran on he's only. done a couple of them he has has.

trillions of dollars of ideas for how to. raise taxes on rich people and. corporations the treasury Department. publishes an entire book full of them. every year called the green book but in. the actual legislation he signed there's. only been a couple really there was a. tax on stock BuyBacks that companies do. and then a new minimum tax for certain. multinational corporations that have. very low tax rates those add up to real. money but they are not in the grand. scheme of BU tax increases a really.

large amount of the agenda he's proposed. MH so explanation number one he just. hasn't been that successful in passing. tax increases and there's a lot of. reasons for that the biggest one is just. the simplest one is that he's just had a. really hard time. persuading members of Congress including. Democrats to back some of his favorite. tax increases you know he wants to raise. the corporate income tax rate which. president Trump cut in his 2017 tax bill.

Biden wants to raise it to 28% from 21%. Congress has not had any appetite to go. along with that he wanted to get rid of. What's called the carried interest. loophole like a longtime white whale of. democratic policymaking but he could not. get even 50 Democrats to go along with. that Senator kirston Cinema of Arizona. was opposed to it and so it didn't get. included right and he did some pieces of. legislation on a bipartisan basis and in. those cases Republicans were just not. not going to pay for anything by raising.

taxes and so he had to take those off. the table there so it's all added up to. just not very much activity in Congress. to raise taxes on what Biden wants to do. got it so that's the side of a ledger. where Biden simply fails to increase. taxes because he can't get Congress to. increase taxes right but there's another. side which is also that Biden has signed. into law a decent number of tax cuts. H and that starts from the very. beginning just a couple months into his.

presidency if you'll recall we're still. in the depths of the covid-19 pandemic. the economy is wobbling after it had. started to rebound Biden proposes what. is essentially a stimulus bill right and. he includes some tax cuts in there a tax. cut for families a child tax credit and. it also includes you remember those. direct checks that people got as part of. that Bill yes $1,400 I remember them yes. those were technically tax cuts hm so.

the stimulus Bill starts with that the. next year he passes this bill that is. trying to accelerate manufacturing of. things like semiconductors in the United. States that's the chips act and that. includes some corporate tax cuts for. companies that invest in the kind of. manufacturing that Biden wants this is. industrial policy via carrots for. corporations and Biden is handing them. out as part of this bill so tax cuts. there and then finally the inflation. reduction act which is includes the.

largest climate effort in American. history is a bunch of corporate tax cuts. at its core tax cuts for manufacturing. of solar panels tax cuts for people to. buy electric vehicles tax cuts for all. sorts of things tied to the transition. from fossil fuels to lower emission. sources of energy and those tax cuts add. up they add up for corporations they add. up for individual.

and in the end that full Suite of tax. cuts that he's passed across all of this. legislation. outweighs the modest tax increases that. were also included in the inflation. reduction act to reduce its. [Music]. cost got it so a very big reason why. Biden ends up cutting taxes beyond the. fact that he's not able to raise them. through Congress is that that's what it. took according to those in his. administration to get American industry.

and American consumers to change their. behavior in line with policy goals such. as getting more domestic computer ship. manufacturing and getting more people to. buy electric vehicles they decided the. way to do that was to give people tax. breaks which means he cut their taxes. right people and companies the the. president certainly has talked. throughout the campaign about wanting to. give middle class families a break but. he has also in the process of crafting. policy really come to rely on tax cuts.

for people and for corporations as a way. of achieving these policy goals and in. many cases again this is what he had to. do to pass these bills through even. Democrats in Congress you know Senator. Joe Mansion of West Virginia didn't want. to just send money to companies that. were making solar panels he wanted there. to be tax incentives for it and so that. is part of the reason why these were. created as tax incentives and so all. this adds up to more of a tax cutting.

record than you might have imagined when. Biden was on the campaign Trail I'm. curious who really ended up benefiting. from these tax cuts you said they went. to people and to corporations but on the. whole did they end up reaching lower. inome Americans middle- inome Americans. or the rich well we don't have a full. distributional analysis which is what. you're asking for of of the entirety of. Biden's tax changes but but we can say. this particularly the ones that were in.

that early stimulus Bill the recovery. plan MH those were very much targeted. toward lower income and middle inome. Americans there were income limits on. who could get things like the child tax. credit obviously the direct payments. went to people who were middle class or. less so the analysis of that would. suggest that these were tax cuts for. lower income people for middle class. people and on the flip side what I think. we are likely to see with the electric. vehicle credit through the inflation.

reduction Act is that while there are. some income limits on who can qualify. for that credit that the people who end. up claiming that credit tend to be the. higher earners among the people who. qualify right who buys a Tesla after all. somebody with a fair amount of money. right exactly and of course the. corporate tax cuts go to companies flow. through to their shareholders there's a. huge debate in the academic literature. among politicians about how much of that. benefit actually ends up going to their. workers versus stays with sh holders but.

we can broadly say that Joe Biden has. has done a lot for certain corporations. who are trying to advance his. manufacturing goals in particular to. reduce their tax bills and that is. certainly not in line with the rhetoric. you hear him talking about most of the. time about making corporations pay their. fair share and the White House. acknowledges this I I asked them about. it and they basically said you know we. think there's a difference between just. cutting the corporate tax rate in a way. that helps anybody no matter what. they're doing and what we're trying to.

do which is basically reward. corporations for accelerating the energy. transition understood but where does. this ultimately leave Biden's campaign. promise to make the tax code fairer and. to make sure that the well-off in. particular and corporations are paying. their what he called fair share I think. by Biden's own measurements by his own. Ambitions he would have to agree that he. is nowhere close to what he believes.

would be a fair share for corporations. because Biden is still running on this. as he enters his reelection campaign as. it really heats up a rematch with Donald. Trump the president is really leaning. into this message of we need to do more. we need to raise more taxes on Corporate. America it is time for these companies. and for high earners to pay their fair. share right I didn't get it done in the. first term but if you elect me I'll get. it done in the second give me another. shot and this time I promise we'll be.

[Music]. different we'll be right. [Music]. back.

so Jim let's talk about Biden's tax. raising plans for a theoretical second. term and why anyone should have any. faith that he could get it done if. there's a second term given the. experience so far of his first term yeah. well man there's a lot of plans to talk. about I don't think we can get through. all of them but we can certainly hit the. highlights here so we can start with the. couple of things that Biden has been. able to do to raise tax on corporations.

he sort of like wants to take those and. then plus them up how so he's put this. new minimum tax on corporations it's a. 15% minimum tax on certain. multinationals he now wants to raise. that to. 21% he wants to take that corporate. stock buyback tax which is 1% right now. and he'd like to quadruple it to 4% and. then he goes after you know some things. large and small he wants to do new taxes. that hit the use of corporate and. private jets he wants to do new taxes on. companies that pay large amounts of.

compensation to their Executives MH and. then we get to some really big taxes on. high earning individuals so the. president has said over and over again. he won't raise taxes on anyone making. less than $400,000 a year but he's got a. bunch of taxes for the people above that. so he wants to raise the top marginal. income tax rate he wants to take it from. 37% which is the level set by President. Trump's 2017 tax law and bring get back. to 39.6% which is what it was before he.

also wants to impose what he calls a. Billionaire's tax okay it's a 25% tax on. the total value of all of the assets of. anyone worth more than $100 million okay. wait I have several questions about this. please first being a fact check if it's. a Billionaire's tax it's interesting. that it's going after people who have. just 100 million yeah I think most. billionaires would be offended at the. inclusion of 100 million SS in that yes.

totally agree that is factually. inaccurate the name right but beyond. that this sounds very much like a wealth. tax which we don't really have in our. system yeah it's a sort of wealth tax. the Biden people don't call it a wealth. tax but it is a tax on something other. than income that you report every year. to the IRS as having been earned it goes. beyond just oh I got interest from my. stock Holdings or I made money from my. job it's oh the value of my art.

collection increased last year and now. Biden's going to tax me on that increase. even if I didn't sell the art that's a. real change and that reflects the. president's view that people with enough. money to buy enormous art collections. that appreciate enormously in value. should be paying more in taxes right and. of course a tax like this is extremely. perhaps maddeningly hard to actually. pull off it's hard to get someone to. describe their art collection's value so. that you can apply a 25% tax to it so. this might end up being more of a.

political statement than a practical tax. yeah there's also questions about. whether it's constitutional so there's. all sorts of drama around this proposal. but it is certainly if nothing else a. statement of the president's intent to. make people worth a lot of money pay a. lot more in taxes okay so that's a lot. of proposed tax increases almost all of. them focused on those who are rich and. corporations overall Jim what stands out. to you about this Biden term 2 tax.

increase plan I think we could very. fairly say that it's the largest tax. increasing plan by a sitting president. or a Presidential nominee for a party in. American history wow he wants to get a. lot of money from corporations and. people who earn or are worth a lot of. money but the rub of course is it's hard. to see the Congressional math that lets. Biden accomplish these tax increases.

some of which like you said he couldn't. get done the first time why would we. think he would get them done the second. time even if he wins this fall yeah it. would be really difficult Biden would. have to win in November Democrats would. have to take the House of. Representatives back from Republicans. which is certainly possible it's very. closely divided right now Y and they. need to hold at least 50 seats in the. Senate and then those 50 Democrats in. the Senate would have to be willing to. go along with Far More in tax increases. than Democrats were last time around so.

if there is a second term it feels like. we should assume it will be very. difficult perhaps even quite unlikely. he's going to get to push through a lot. of these taxes which makes me wonder Jim. why is Biden running on a tax program. that he knows has so little chance of. becoming reality and when it's pretty. clear that he's gotten a lot of stuff. done without raising taxes it turns out. it's not been all that essential to. getting infrastructure or climate bills.

done so why is he making this so Central. several reasons one of them is that it's. very important to him rhetorically to. talk about fiscal. responsibility big parts of the Biden. agenda the chips Bill the infrastructure. Bill some other legislation were not. actually paid for the spending and tax. cuts were not offset by tax increases so. they're going to add to the debt right. so they're going to add to the debt same. is true of the stimulus bill but moving. forward the president has said that he's. going to pay for his agenda and he's.

actually going to have some extra tax. dollars coming in left over to help pay. down future budget deficits and on paper. it's the way to pay for Biden's other. big expansive plans that he hasn't been. able to do what wants to Universal Child. Care Federal paid leave investing in. Elder Care just a whole bunch of things. that he still wants to do more housing. initiatives the president needs money to. make a case that he's being fiscally. responsible and this is the money that. would do that got it so that's one. reason another reason is the calendar.

Biden and his team are looking ahead to. the end of 2025 and they know that if he. wins another term he will be in office. at a rare moment in Washington when. basically tax policy has to be on the. Congressional agenda why well. Republicans when they passed their tax. cuts in 2017 set a bunch of them to. expire at the end of 2025 in order to. lower the cost of the bill these are the. Trump tax cuts the Trump tax cuts and.

that includes all the tax cuts for. individuals so now that those are coming. due there's going to be a fight in. Washington over whether to extend them. or make them permanent or change them in. some way or just let them expire and. Democrats know there's going to be a. huge fight that will reach almost. certainly the floor of the house and the. Senate and so Biden wants to be ready he. wants to be ready with a suite of policy. proposals the Democrats can basically. pull off the shelf and try to use to put.

Republicans in a box basically say we. would like to keep taxes low or cut them. further for low-income workers middle. class workers but we want to pay for. that by raising taxes on the rich you. Republicans also want to do nice things. for low and middle class workers but you. want to cut taxes for corporations and. the rich and we think that's a political. loser for you so Biden is ready with. what they think will be AIT winner for. Democrats in this almost certain floor.

tax fight at the end of 2025 got it and. that sort of brings us to the last. reason why Biden is doing this and maybe. the most important which is it's really. good politics H just explain that why is. talking about tax increases net tax. increases such good politics if you talk. to democratic pollsters if you talk to. people inside the White House outside. the White House political strategists.

anywhere in Biden's orbit they all agree. that the public loves the idea of. forcing rich people and corporations to. pay their quote fair share it's just. become a winning and Central political. argument in Democratic campaigns the. idea that corporations avoid taxes that. rich people avoid taxes and that you. know Joe Biden is trying to position. himself as a champion of the idea that.

they need to pay more those corporations. and those rich people need to pay more. and he's going to make it happen you're. describing this as something that is. kind of a new political reality is that. right yeah it's sort of evolved over the. last decade or so I think you know for a. long time in Washington the conventional. wisdom was you just couldn't talk about. tax increases of any kind they were. poison there was a whole anti-tax. movement that did a really good job of. messaging that and Democratic candidates. got very scared of talking about raising.

taxes even on the very very rich that. started to turn over time but it's. really changed I think you know we saw. in the 2020 election that the Democratic. primary had just enormous amounts of. taxes on corporations and the rich. funding all sorts of policy proposals. Medicare for all and Universal child. care and trillions and trillions of. dollars and Democratic candidates like. Liz Warren and Bernie Sanders sort of. competing to see who could tax. corporations and the rich the most Biden.

is sort of a product of that primary he. was one of the most moderate people in. that group but his proposals are really. outside of the historical Norm for. Democratic candidates up until then and. that reflects the fact that pollsters. have been doing all this research. finding that the American people. including Independents and increasingly. numbers of Republicans just don't think. corporations pay their fair share and. are open to the idea they should pay. more this is really interesting it makes. me think that what you're really saying. is that there might have been a time.

when a democratic nominee like Joe Biden. might have reveled In His Image as an. overall tax gutter but that is not this. moment and that is not this candidate he. wants to be a tax increaser he thinks. that is where the politics are I think. that's exactly right when you think. about tax increaser as tax increaser on. the rich and on corporations mhm you. know sort of two ways to be a successful.

populist politician right one of them is. to be kind of like Trump and run around. saying you're to do enormous tax cuts. for everybody which is sort of a. republican version of populism Trump my. biggest tax cut in history I'm going to. do another huge enormous tax cut it's. going to be so big you won't believe it. there might have been a time when. Democrats tried to follow that Playbook. but Biden's not doing that he's leaning. into the other side of populism he's. telling workers hey I'm on your side. with these big companies they're trying.

to screw you and I'm not going to stand. for it and so I'm going to raise their. taxes I'm going to make them pay more so. that there's more money for you whether. that's more tax cuts or more programs or. whatever and that is sort of the. democratic version of populism right now. and that's the one that Joe Biden is. running on and that's why he's so happy. to talk about raising corporate taxes. because it's a way to tell workers hey. I'm on your side right even if that's. not what he's done or ever may be able. to do.

yeah part of the problem with populism. is that you make a lot of promises you. can't keep and this certainly in in his. first term has been an area where the. president has talked a much bigger game. than he's been able to execute second. term might be different but that doesn't. really matter for the campaign what. matters is is the. [Music]. rhetoric.

[Music]. well Jim thank you very much we. appreciate it thank you always a. [Music]. pleasure we'll be right.

back here's what else you need to know. today on Tuesday Israel confirmed that. it had carried out the air strike that. killed seven Aid workers delivering food. to civilians in Gaza the attack which. occurred on Monday struck a convoy run. by the world Central Kitchen a nonprofit. group. at the time of the attack the aid.

workers were traveling in clearly marked. cars that designated them as non. combatants Israel's prime minister. Benjamin Netanyahu described the attack. as unintentional and said that his. government deeply regretted the deaths. in its own statement World Central. Kitchen called the strike. unforgivable and said that as a result. it would suspend its Aid work in Gaza. where millions of people are in dire.

need of both food and. Medicine today's episode was produced by. Stella tan and Mary Wilson with help. from Michael Simon Johnson it was edited. by Lisa Chow contains original music by. Dan Powell and Maran Lozano and was. engineered by Chris Wood our theme music. is by Jim brunberg and Ben lansberg of. wonderly. [Music].

that's it for the daily I'm Michael Boro. see you. [Music]. tomorrow.