The administration of U.S. President Joe Biden proposes to allocate $5.8 trillion for federal spending in fiscal year 2023, which is slightly less than it was supposed to spend this year.
The White House presented on Monday a draft budget for the next fiscal year (starting in the United States on October 1), which provides for higher taxes for the rich, lower deficits, increased spending on police, increased funding for education and healthcare.
The administration of U.S. President Joe Biden is proposing to allocate $5.8 trillion for federal spending in fiscal year 2023, which is slightly less than it was supposed to spend this year. The draft budget implies the allocation of $795 billion for the country’s defense, $915 billion for domestic programs.
According to the project, the budget deficit will amount to $1.15 trillion. This figure in fiscal year 2021 amounted to $2.8 trillion, which is $360 billion less than the record high budget deficit in the country’s history for fiscal year 2020. The White House in the document provides for reducing the annual deficit by more than $1 trillion over the next decade. These cuts will occur mainly due to higher taxes for the rich.
This decision to increase taxation will bring the state an income of $361 billion over 10 years and will affect 0.01% of households. The draft budget indicates another $1.4 trillion, which will be received over the next decade by increasing other taxes. This will make it possible to implement Biden’s promise not to raise taxes for people earning less than $400,000 a year.
So, the document specifies a minimum tax of 20% on household incomes of $100 million and above. The tax changes also include an increase in the corporate tax rate from 21% to 28% and the top individual tax rate to 39.6%.
The plan is based on a forecast that the American economy will return to normal next year after unprecedented costs associated with the pandemic and inflation. The budget forecasts inflation of 4.7% this year and 2.3% in 2023, compared with 7% in 2021. However, in the first two months of 2022, inflation continued to rise, and the situation in Ukraine pushed up energy prices, which could spread to the entire economy.
These proposals were immediately criticized by Republicans. They noted that with such a draft budget, the annual deficit exceeding $ 1 trillion will remain, tax increases may damage economic growth, and additional government spending will lead to an increase in inflation.
The presidential draft budget is a request sent to Congress, which refers to the priorities of the administration. Members of the House of Representatives and the Senate of Congress themselves develop and approve government expenditures, after which the final document is signed or rejected by the head of state.