By Alex Brill

Earlier this week, the White House unveiled a budget gimmick advertised to the public as “The President’s Budget for Fiscal Year 2023.” The budget proposes $2.5 trillion in net tax hikes, almost entirely from businesses and high-income households, and touts policies that would “reduce deficits by more than $1 trillion” over the next decade. But a short note in the preamble to the Treasury Department’s report on the budget reveals a sleight of hand:

The revenue proposals are estimated relative to a baseline that incorporates all revenue provisions of Title XIII of H.R. 5376 (as passed by the House of Representatives on November 19, 2021), except Sec. 137601.

In other words, the budget pretends that the failed effort to enact President Biden’s Build Back Better Act was a success and considers new budget proposals in addition to those policies. But you won’t find the price of the Build Back Better (BBB) Act (including its roughly $1 trillion in net tax hikes) in the budget tables.

This strategy of detaching proposals from their budgetary realities makes it more difficult to evaluate the administration’s policy priorities. A year ago, for example, President Biden proposed a four-year extension of the expanded child tax credit that he pushed into law as part of the American Rescue Plan Act. House Democrats scaled that back to a one-year policy as part of another budget gimmick in the context of the reconciliation bill: the use of temporary tax cuts to mask the true cost. In the current budget, the costly expanded child tax credit is gone.

Other
aspects of the administration’s budget are clearer but not more realistic.
President Biden again proposes to raise taxes on US corporations by increasing
the corporate tax rate to 28 percent, a policy explicitly rejected by congressional
Democrats after extensive efforts by the business community to defend the competitiveness
of US businesses in a global economy.

President
Biden is in a tough spot. A foolish campaign pledge not to raise taxes on
households earning less than $400,000 a year severely limits the options for
the types of reforms that can broaden the tax base and efficiently generate
more revenue. Even the much-needed inflation indexing for the gas tax was ruled
out by the White House.

None of these budget tactics will help the administration in the long run. Senator Joe Manchin (D-WV), the key vote they seek in the Senate, has made clear that budget gimmicks won’t win his support. The administration would be wise to heed Senator Manchin’s call and embrace a framework of budget honesty that reflects the true impact of the president’s agenda on the deficit.

The post Sleight of hand: The administration’s tax agenda appeared first on American Enterprise Institute – AEI.