WASHINGTON — House Democrats unveiled a sweeping proposal for tax increases on large corporations and the wealthy to fund President Joe Biden’s $3.5 trillion Reconstruction plan, as Congress rolls out a far-reaching package touching almost all aspects of domestic life. Proceeds to shape.
The proposed top tax rate would return to 39.6% on individuals earning more than $400,000, or more than $450,000 for couples, and a 3% tax on wealthy Americans with adjusted incomes over $5 million per year. For larger businesses, the proposal would raise the corporate tax rate on income over $5 million to 26.5% from 21%, slightly lower than the 28% rate the president sought.
Representative Richard Neill, D-Mass., chairman of the tax-writing Ways and Means Committee, said Monday that the proposals, taken together, “will expand opportunity for the American people and help build a healthier, more prosperous future.” Will support our efforts.”
It is an opening bid at a difficult moment for Biden and his allies in Congress as they assemble a massive package that is expected to become one of the largest single domestic policy measures in decades. The president’s “Build Back Better” agenda includes spending on child care, health care, education and strategies to combat climate change. It is an ambitious undertaking on par with the Great Society or the New Deal.
Republican critics have widely condemned Biden’s plan, suggesting that it slopes toward Western European-style socialism, and that they specifically disapprove of the taxes required to pay for it, as it was a GOP tax cut. which was approved a few years back.
Senate Republican leader Mitch McConnell said the proposal is “the last thing American families want.” All GOP lawmakers are expected to vote against it.
But Republicans are largely sidelined because Democrats rely on a budget process that would allow them to approve proposals on their own, if they can secure their modest majority in Congress.
Democrats have no vote to implement Biden’s agenda, with their thin grip on the House and Senate split 50-50 and Vice President Kamala Harris having a tiebreaker with no Republican support. Democratic congressional leaders have set Wednesday for committees to draft the bill.
A Democratic senator critical of the bill’s fate says the cost would need to be reduced from $1 trillion to $1.5 trillion to win his support.
Sen. Joe Manchin, DW.Va., suggested it was time for a “strategic pause”, and cautioned that there was “no way out” from Congress House Speaker Nancy Pelosi, D-Calif., to pass the end-September target. to complete. Given its wide differences with liberal Democrats on how much to spend and how to pay for it.
“I can’t support $3.5 trillion,” Manchin said on Sunday, specifically citing his opposition to raising the corporate tax rate above 25%, a figure he says would cost the U.S. globally. Will keep you competitive.
Munchkin is not alone, as other centrist lawmakers have raised concerns. Raging Democrats from high-tax, heavily Democratic states such as New York, New Jersey and California are pushing to repeal the $10,000 cap on state and local tax deductions imposed by the Trump law of 2017. Neil indicated on Monday that the issue was being seriously considered.
Finding a compromise will be a difficult project as Sen. Bernie Sanders, progressives, including i-VT, are striving for the strongest package possible. As chairman of the budget committee that helped write the bill, Sanders noted that he and other members of the liberal side had initially urged an even stronger $6 trillion package.
“For me, it’s not a specific number, but it’s making sure we meet this moment,” said Representative Katherine Clark, D-Mass., a member of House Leadership. “The pandemic has shown us that we cannot and do not continue to be the economy of the wealthy.”
The White House welcomed the initial tax plan, which follows on from Biden’s promise not to tax anyone earning less than $400,000. Deputy Press Secretary Andrew Bates said the proposal “makes significant progress toward ensuring our economy works, not just money.”
The House, Senate and White House are working together to align their plans ahead of this month’s deadline, though some differences are emerging that will need to be resolved.
The House tax proposal was pitched as a preliminary estimate, potentially $2.9 trillion – but it would go a long way toward paying off the $3.5 trillion legislation. The White House is counting on long-term economic growth from a plan to generate an additional $600 billion to fill the gap.
Most of the revenue raised will come from higher taxes on corporations and the highest earners, raising the personal tax rate to 39.6% from the current 37%.
Looking at the wealthy, Neil is proposing to raise the top tax rate on capital gains to 25% from the current 20% for those earning $400,000 or more per year. The exemption for estate taxes, which was doubled under the 2017 Trump tax law, will now return $11.7 million for individuals, down to $5 million.
Also proposed is an increase in the tax rate on tobacco products and a new tax on non-tobacco nicotine delivered by e-cigarettes.
Democrats’ broad blueprint proposes spending billions to rebuild infrastructure, tackle climate change, and expand or launch a range of services from free preschools to dental, vision and hearing aid care for older people.
Pelosi and Senate Majority Leader Chuck Schumer, D.N.Y., to draft the bill. Pelosi is seeking a House vote by October 1 and then it will go to the Senate. It is nearing a September 27 timeline to vote on a slimmer infrastructure plan backed by liberal lawmakers.
Associated Press writers Hope Yen and Josh Bok contributed to this report.