Politics House Democrats plan to hike capital gains tax to pay for Biden spending package
House Democrats unveil plan to raise taxes on Amazon, Microsoft, and other wealthy corporations and Americans making over $5 million
The House Ways and Means's plans to hike corporate taxes to 26.5% and capital gains to 25% are all more modest than Biden's original proposals.On Monday, Democrats on the House Ways and Means Committee circulated a draft of its tax proposals for the nascent reconciliation plan. They aim to approve it along party-lines without any Republican support because the reconciliation process only requires a simple majority vote.
House Democrats are plotting to raise the capital gains rate as one of several mechanisms to raise trillions of dollars for their new spending package.
The current proposal is that the capital gains rate for high-income individuals be increased from 20% to 25%, a number that falls short of President Joe Biden’s initial pitch to hike the rate by nearly double to 39.6%.
When factoring in an existing Obamacare surtax on investment income, people making over $1 million would pay an effective rate of 28.8%. By raising the capital gains rate, Democrats hope to raise $123 billion, according to anthat leaked to the media.
Business groups are fighting Biden's $3.5T budget over taxes, drug negotiations
Major business groups oppose raising corporate taxes to pay for the bill while some industries have come out against specific parts of proposal.Advocacy groups are drawing battle lines in opposition to parts of the bill aiming to raise taxes on corporations and wealthy individuals, lower prices on prescription drugs and combat climate change. The fights that could trim or threaten to kill the legislation will play out in the coming days and weeks as committees rush to meet a Wednesday deadline for drafting legislation.
The capital gains increase is more modest than initially proposed. The lower-than-expected rate is also a sign that there is concern that more centrist members of the party might be reticent to vote on the legislation if its tax overhauls are more drastic.
The increase in the capital gains tax is one of several revenue-raising measures that Democrats are planning to introduce.
Democrats also want to increase the top tax rate on individuals making over $400,000 per year to 39.6%, up from the current 37% rate. This would also apply to married couples filing jointly who earn over $450,000 annually.
Leadership also wants to raise the corporate tax rate to 26.5% from 21%, which is also scaled back from the White House’s original proposal to raise the corporate tax rate up to 28%.
Five tax issues to watch as Democrats craft $3.5T bill
Democrats are scrambling to craft their multitrillion-dollar social spending package while seeking to avoid any points of contention that could threaten party unity.Many key aspects of the package pertain to taxes. Many key aspects of the package pertain to taxes. Democrats want to extend expansions of tax credits benefiting low- and middle-income households that were enacted under President Biden's coronavirus relief law earlier this year. They also want to pay for their proposed spending and tax cuts - which focus on areas such as health care, child care and climate - through tax increases on corporations and high-income individuals.
Democrats need every vote they have in the Senate and can’t afford to lose more than a few votes in the House to ram through the legislation.
In addition to raising revenue through increased tax enforcement, the party is also proposing a new surtax on those who make more than $5 million. Those earners would pay an additional 3% tax, which would raise an estimated $127 billion.
All total, Democrats think the entire menu of tax proposals would raise some $2.9 trillion over the coming decade. They think that the entire $3.5 trillion would be paid for when dynamic scoring, the notion that the policy changes would accelerate economic growth and allow the government to collect increased revenue from that prosperity, is factored in.
While the spending package is coming together quickly, there is still a long way to go before it is a final bill on the president’s desk.
House Democrats take step back from Biden on tax hikes
House Democrats on Monday released tax-increase legislation that scales back some of President Biden's key proposals as they work to craft a massive social spending package that can get the votes to become law.The bill text released Monday by the House Ways and Means Committee includes a variety of tax increases targeted at wealthy individuals and corporations in an effort to help pay for $3.5 trillion in spending and tax cuts in areas such as child care, climate and health care. But in many ways it is not as aggressive in raising taxes as Biden has proposed, prompting criticism from progressive groups.
Some more centrist Democrats haveabout the possible price of the bill and are hoping to see it paid for. Sen. Joe Manchin has said he thinks the price tag of $3.5 trillion is too high and signaled that he would be more inclined to vote for a pared-back package that clocked in closer to $1.5 trillion.
The West Virginia Democrat’s unease with the massive spending package has generated some backlash within his own party, with independent Sen. Bernie Sanders of Vermont“not acceptable.”
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K Street counting on Senate to pare back Democrats’ tax plan .
Lobbyists for business interests are confident they can fight off parts of House tax proposal they find most threatening.In interviews this week, lobbyists representing a range of business interests said they aren’t too worried about the party’s opening salvo on tax increases, confident the bill — and the threats their clients insist it poses — will be pared back in order to thread its way through a narrowly divided House and Senate.