Featured Image

SOTU and Biden’s Budget. Are Tax Increases on the Horizon?

President Biden’s recent State of the Union address and Fiscal Year 2025 budget proposal signal potential tax hikes. What are the implications for manufacturing competitiveness and economic strategy?
Mar 20, 2024

On March 7, 2024, President Biden delivered his third State of the Union (SOTU) address. He submitted his Fiscal Year 2025 budget to Congress days later. The speech and the budget outline the president’s plan for the coming year and lay out a framework of what he wants to accomplish should he win a second term. There could be significant ramifications for manufacturers.    In his speech, Biden held up manufacturing job growth over the last three years as an administration success story and vowed to continue to focus on investing in “American products built by American workers creating good-paying American jobs.” He touted a record 16 million Americans starting small businesses.     Yet when the FY2025 budget was released, it topped $7.3 trillion and included nearly $5 trillion in new taxes on businesses and high earners. The FY2025 budget also includes:     

  1. Increasing corporate tax rate from 21% to 28%  

  2. Quadrupling the 1% surcharge on stock buybacks  

  3. Denying tax deductions on executive pay for salaries over $1 million  

  4. Doubling the corporate minimum tax from 10.5% to 21% to be compliant with the Biden-backed global tax agreement that more than 130 countries have committed  

  5. Changing capital gains and estate tax rules that could negatively impact small family-owned manufacturers and  

  6. No mention of extending expensing for capital equipment and R&D costs — AMT’s top advocacy priority.  

In aggregate, the corporate tax rate would rise about 10%. The cost of manufacturing in the United States already averages 40% higher than in China and 10% higher than in other developed countries. Achieving an acceptable after-tax return on capital investment required for U.S. reshoring and foreign direct investment (FDI) is difficult. Adding to our current cost problem, the disadvantage of being one of the most highly taxed developed countries will severely hurt U.S. competitiveness. Instead, the tax system should focus on making the U.S. the most profitable country for companies to locate manufacturing.   

It is important to note that the SOTU and annual budgets are policy statements rather than concrete initiatives. The president’s proposed tax increases will certainly not fly in the GOP-controlled House. However, taxes will be a top issue for whoever wins in November, as the 2017 tax cuts expire in 2025. 

Amber Thomas
Vice President, Advocacy
Recent advocacy News
Last fall, the U.S. Environmental Protection Agency issued two rules relating to toxic substances that significantly impact manufacturers and suppliers. Learn about these guidelines affecting PIP (3:1) and PFAS – and how they affect your business.
Policy makers came together at The MFG Meeting 2023 to share data and insights on policy-making actions of concern to manufacturers. Here are seven key takeaways that may impact your manufacturing business.
Reducing water use is not a big concern for most manufacturers, but there are solid reasons to look at better water efficiency now before challenges arise in the future.
The National Institute of Standards and Technology’s (NIST) Manufacturing Extension Program (MEP) announced awards of roughly $400,000 to each of its MEP National Network Centers in all 50 states and Puerto Rico.
Recent AI news and developments have piqued the public's curiosity – and fear. A slew of activities are happening in Washington this month related to artificial intelligence and how to regulate it to protect Americans’ rights and safety.
Similar News
By Bonnie Gurney | Apr 16, 2024

To make a long manufacturing story short, we asked industry leaders to summarize manufacturing technology in just one word in our new series “The World According To…” presented by IMTS+.

5 min
By Tim Shinbara | Apr 15, 2024

With new advanced technologies and materials in development, product engineers will have more options to design durable parts that serve a dual purpose: lower cost over time and less waste in landfills.

7 min
By Edward Christopher | Apr 01, 2024

Here is a list of 2024 international trade shows you won't want to miss!

5 min