Tax News Update    Email this document    Print this document  

February 8, 2023

In State of the Union speech, Biden proposes reducing deficit By $2 trillion by closing tax 'loopholes,' other measures

President also highlights kids' data privacy, initiatives on prescription drug costs, mental health, cancer, fentanyl

In his second State of the Union address and first in front of a divided Congress, President Biden on February 7 struck a mostly optimistic tone, saying that in the last two years the nation had recovered from the depths of the coronavirus pandemic to create 12 million new jobs, and that the American democracy was "unbowed and unbroken" despite facing the insurrection at the Capitol on January 6, 2021. Biden proposed reducing the budget deficit by $2 trillion with help from revenue raisers, including the 15% corporate minimum tax enacted in the 2022 Inflation Reduction Act (IRA), a quadrupled tax on corporate stock buybacks, closing unspecified tax loopholes and "cracking down on wealthy tax cheats."

In health issues, the president said that "thanks to the resilience of the American people, we have broken COVID's grip on us." Biden highlighted the Inflation Reduction Act's provisions controlling prescription drug costs and called for the cost of insulin to be capped at $35 a month for those with private insurance (for reconciliation procedural reasons, the IRA only capped insulin costs for Medicare beneficiaries). The president also promoted a series of "Unity Agenda" health initiatives related to cancer, opioids and mental health.

Selected excerpts below from the president's prepared remarks touched on topics including tax policy, health care, data privacy and 'junk fees" charged by businesses. Attached with this Alert is a White House fact sheet on the Unity Agenda programs mentioned in the speech.

Tax Policy

Reducing Budget Deficit by $2 Trillion. "Next month when I offer my fiscal plan, I ask my Republican friends to offer their plan. We can sit down together and discuss both plans together. My plan will lower the deficit by $2 trillion. I won't cut a single Social Security or Medicare benefit. In fact, I will extend the Medicare Trust Fund by at least two decades. I will not raise taxes on anyone making under $400,000 a year. And I will pay for the ideas I've talked about tonight by making the wealthy and big corporations begin to pay their fair share. Look, here's the deal. Big corporations aren't just taking advantage of the tax code. They're taking advantage of you, the American consumer."

Corporate Taxes. "I think a lot of you at home agree with me that our present tax system is simply unfair. The idea that in 2020, 55 of the biggest companies in America made $40 billion in profits and paid zero in federal income taxes? That's simply not fair. But now, because of the law I signed, billion-dollar companies have to pay a minimum of 15%. Just 15%. That's less than a nurse pays. Let me be clear. Under my plan, nobody earning less than $400,000 a year will pay an additional penny in taxes … Big corporations aren't just taking advantage of the tax code. They're taking advantage of you, the American consumer."

Billionaire Minimum Tax, Stock Buyback Tax. "Let's finish the job. Reward work, not just wealth. Pass my proposal for a billionaire minimum tax. Because no billionaire should pay a lower tax rate than a school teacher or a firefighter. You may have noticed that Big Oil just reported record profits. Last year, they made $200 billion in the midst of a global energy crisis. It's outrageous. They invested too little of that profit to increase domestic production and keep gas prices down. Instead, they used those record profits to buy back their own stock, rewarding their CEOs and shareholders. Corporations ought to do the right thing. That's why I propose that we quadruple the tax on corporate stock buybacks to encourage long-term investments instead. They will still make a considerable profit."

Tax Enforcement. "Let's finish the job and close the loopholes that allow the very wealthy to avoid paying their taxes. Instead of cutting the number of audits of wealthy taxpayers, I signed a law that will reduce the deficit by $114 billion by cracking down on wealthy tax cheats. That's being fiscally responsible."

'Junk Fees.' "We've reduced exorbitant bank overdraft fees, saving consumers more than $1 billion a year. We're cutting credit card late fees by 75%, from $30 to $8. Junk fees may not matter to the very wealthy, but they matter to most folks in homes like the one I grew up in. They add up to hundreds of dollars a month. They make it harder for you to pay the bills or afford that family trip. I know how unfair it feels when a company overcharges you and gets away with it. Not anymore. We've written a bill to stop all that. It's called the Junk Fee Prevention Act. We'll ban surprise 'resort fees' that hotels tack on to your bill. These fees can cost you up to $90 a night at hotels that aren't even resorts. We'll make cable, internet and cell phone companies stop charging you up to $200 or more when you decide to switch to another provider. We'll cap service fees on tickets to concerts and sporting events and make companies disclose all fees upfront. And we'll prohibit airlines from charging up to $50 round-trip for families just to sit together. Baggage fees are bad enough — they can't just treat your child like a piece of luggage."

Data Privacy for Children and Teens

"We must finally hold social media companies accountable for the experiment they are running on our children for profit. And it's time to pass bipartisan legislation to stop Big Tech from collecting personal data on kids and teenagers online, ban targeted advertising to children, and impose stricter limits on the personal data these companies collect on all of us."

Health Care

President Biden focused much of his speech on the economic toll Americans have been facing, including high health care and prescription drug prices. He said, "This is a blue-collar blueprint to rebuild America and make a real difference in your lives. For example, too many of you lay in bed at night staring at the ceiling, wondering what will happen if your spouse gets cancer, your child gets sick, or if something happens to you."

Insulin, prescription drug, and health care costs. Biden noted that the Inflation Reduction Act (IRA) includes provisions to control prescription drug costs by penalizing drug companies whose prices rise faster than inflation and capping insulin and out-of-pocket costs for Medicare beneficiaries. Biden called on Congress to go further and "cap the cost of insulin at $35 a month for every American who needs it" and vowed to veto any attempts to repeal the IRA.

Biden said the IRA "also caps out-of-pocket drug costs for seniors on Medicare at a maximum $2,000 per year when there are in fact many drugs, like expensive cancer drugs, that can cost up to $10,000, $12,000, and $14,000 a year. If drug prices rise faster than inflation, drug companies will have to pay Medicare back the difference." He called on Congress to make permanent enhanced Affordable Care Act premiums and called on the remaining states to expand Medicaid under the ACA. The president also touted his administration's implementation of two bills enacted during the Trump administration: the No Surprises Act and the Over-the-Counter Hearing Aid Act. Biden said his administration has stopped insurance companies from sending "1 million surprise [medical] bills a month" and made hearing aids available over-the-counter.

Debt ceiling negotiations. Biden also took aim at Republican proposals to use the looming debt limit as leverage to enact Medicare spending cuts, which was met with backlash from Republicans in the chamber. "[S]ome Republicans want Medicare and Social Security to sunset every five years. … Other Republicans say if we don't cut Social Security and Medicare, they'll let America default on its debt for the first time in our history," Biden said, adding, "I won't let that happen." Instead, Biden said he has a fiscal plan to lower the deficit by $2 trillion while extending the Medicare Trust Fund by at least 20 years.

COVID public health emergency. Biden took a moment to discuss the COVID-19 pandemic, saying, "While the virus is not gone, thanks to the resilience of the American people, we have broken COVID's grip on us." Biden said, "COVID deaths are down nearly 90%" and the United States would soon "end the public health emergency." But, he added, "we will remember the toll and pain" and called on Congress to pass additional funding to ensure the United States can continue to "monitor dozens of variants and support new vaccines and treatments."

Reproductive health. Biden called on Congress to "codify Roe v. Wade to protect every woman's constitutional right to choose," and affirmed his commitment to enacting access to reproductive health care and safeguarding patient privacy. "[I]f Congress passes a national abortion ban, I will veto it," Biden said.

Unity Agenda. During his speech, President Biden discussed the ways in which his administration made progress on the Unity Agenda — ending cancer as we know it; supporting veterans; tackling the mental health crisis; and beating the opioid and overdose epidemic — which he announced during last year's State of the Union address.

  • Mental health: Biden noted that Congress "passed a gun safety law making historic investments in mental health." A fact sheet released before the speech noted that the Biden administration and Congress have made critical investments in the U.S. mental health care system, such as the launch of the 988-suicide prevention hotline and expanding Certified Community Behavioral Health Clinics. It also outlined several next steps, including a federal agency campaign to support the mental health of the health care workforce, a Children and Youth Resilience Challenge with a $750,000 price, and new grants to improve school-based mental health. In addition, the administration plans to take steps to bolster and diversify the behavioral health workforce, issue new rules to strengthen parity and take steps to promote interstate license reciprocity for mental health care.
  • Cancer Moonshot: Biden noted that his administration "launched ARPA-H to drive breakthroughs in the fight against cancer, Alzheimer's, diabetes, and so much more." According to the fact sheet, the Cancer Moonshot initiative has announced dozens of new public-private partnerships and programs to bring the United States closer toward the goal of cutting the cancer death rate in half in 25 years. It also calls for the reauthorization of the National Cancer Act and re-allocation of the 21st Century Cures Act's investment in cancer research, which is set to expire this year.
  • Opioids and fentanyl: Biden said he plans to "launch a major surge to stop fentanyl production" and reduce the amount of fentanyl entering the United States. In the fact sheet, the White House calls for action to reduce the amount of fentanyl entering the United States, help states increase access to naloxone, and ensure providers can safely prescribe evidence-based treatments, such as buprenorphine, for opioid use disorder. It also calls on Congress to pass legislation to permanently label "fentanyl related substances" as Schedule I drugs.
  • Veteran suicide: The president touted the Department of Veterans Affairs' efforts to prevent veteran suicide, "including expanding mental health screenings and a proven program that recruits veterans to help other veterans understand what they're going through and get the help they need … We cannot go on losing 17 veterans a day to the silent scourge of suicide."


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
   •  Any member of the group at (202) 293-7474.


Unity Agenda fact sheet