Janet Yellen
Treasury Secretary Janet Yellen defended President Joe Biden’s proposed budget before the Senate March 21, as several Republicans criticized the $7.3 trillion budget and its effects.
Released March 11, the budget proposes raising the corporate tax rate to 28% from 21%, which drew scrutiny from some GOP members on the Senate Finance Committee.
Mike Crapo, R-Idaho, the committee’s ranking member, said if the U.S. were to institute a 28% corporate tax rate, it would “result in corporate inversions, capital leaving the United States, increased … prices for Americans, adding onto inflation, and reduced wages.”
“Is the president seriously considering causing those kinds of economic impacts, when we need to have our economy stay strong and have our wage growth be vibrant?” Crapo asked Yellen.
“I agree with you that we need a strong economy and we would not want to see capital flee from the United States to foreign shores,” Yellen responded. “That's the reason for supporting the OECD’s tax pact, which many countries, including the U.K., Japan, the European Union and others, are now putting into effect … (as) a 15% minimum tax on multinational corporations.”
The OECD, or Organization for Economic Cooperation and Development, is made up of 38 countries and serves as a forum for international collaboration on developing economic policy.
Sen. Chuck Grassley, R-Iowa, was also critical of Biden’s proposed corporate tax hike, contending that “millions of middle-class Americans with 401(k)s or IRAs bear the burden of the corporate taxes, as do workers in the form of lower wages.”
Yellen pushed back on that statement, responding, “a tax that is levied on corporations …has no obvious, direct effect on households. I don’t believe the president would regard (that) as raising taxes on families making under $400,000,” referencing one of Biden’s key campaign promises.
Biden’s budget also proposes quadrupling the 1% tax on stock buybacks to 4% and working with Congress to protect Social Security and extend its solvency, as the main Social Security trust fund has a projected depletion date of 2033.
Specifically, Biden said he would reject any bill that proposes cutting benefits or privatizing Social Security, and will work to increase the income tax cap, according to a White House fact sheet. As of 2024, Social Security's income tax cap is $168,600, so individuals don’t get taxed on earnings above that amount, according to the Social Security Administration.
Sen. Bill Cassidy, R-La., expressed frustration with the lack of details in the budget, pressing Yellen as to why the president doesn’t lay out a specific solution for Social Security.
“The president doesn’t have a plan, he has principles,” Yellen told Cassidy. “He wants to work with Congress to find a way to protect Social Security and extend its solvency.”
One popular bill among House Democrats is the Social Security 2100 Act, which would issue a 2% increase in benefits across the board and tax all earnings above $400,000. The bill, which Connecticut Rep. John Larson reintroduced in July, has the support of over 180 co-sponsors in the House, while a Senate version of the bill has four co-sponsors. Neither bill has moved as of yet.
