Politics House Dems have a $2T tax plan. Here’s what you should know.
$3.5 trillion Democratic Party spending plan means tax hikes
President Joe Biden and Senate Democrats are pushing a reckless $3.5 trillion tax and spend plan. © Provided by Washington Examiner Senate Majority Leader Chuck Schumer and Budget Committee Chairman Bernie Sanders claim their plan would be the largest tax cut in history for the middle class. This is not true. These plans would raise taxes on working families and small businesses and would expand the welfare state and broader dependency on government.
House Democrats this week are moving forward with their long-awaited plan to raise taxes to help pay for their next big spending package. With more than 40 separate tax increases, collectively worth $2 trillion, it would be the largest package of tax increases in decades — and a test of Democrats’ willingness to raise rates.
Lawmakers want the money to fund plans to greatly boost government benefits, from expanding access to pre-K programs to beefing up Medicare — though Democrats remain at odds over the plan’s total size, with Sen. Joe Manchin of West Virginia balking at designs to spend $3.5 trillion.
Union urges NFL to adopt daily COVID-19 testing for vaccinated players
There’s a decent chance that the COVID-19 pandemic will play more of a role during the 2021 NFL season than last year. We’re seeing relaxed protocols from the league as it relates to fully vaccinated players with Week 1 of the campaign slated to get going Thursday evening. It has already led to some COVID-related issues for teams. That includes star guard Zack Martin and the Dallas Cowboys with their opener against the Tampa Bay Buccaneers mere days away. Despite being fully vaccinated, Martin tested positive for the virus and will miss the game.NFLPA president JC Tretter of the Cleveland Browns touched on this recently.
Democrats are now racing to move the plan though the House, with the Ways and Means Committee taking it up Monday and Tuesday. Speaker Nancy Pelosi plans to have it approved and out of the House by the end of this month.
Here are six things to know about the plan.
No wealth tax
The U.S. has an income tax system, and not a wealth tax system like the one Sen. Elizabeth Warren (D-Mass.) advocates, and that’s not going to change under House Democrats’ proposal. With only a tiny majority in the chamber, and at the mercy of their moderates, Democrats are focused on raising existing income taxes on the rich rather than more controversial proposals to go after accumulated wealth.
Their plan would raise the top marginal income tax rate to 39.6 percent, from 37 percent; impose a new 3 percent surtax on people making more than $5 million; and raise the capital gains rate to 28.3 percent from 23.8 percent, among other changes.
House Dems plot $2.9TRILLION tax raid to fund social spending plan
The plans are a major rollback of Donald Trump's tax cuts and will see the corporate rate hiked from 21 per cent to 26.5 per cent according to the draft proposal circulating among Democrats.The plans are a major rollback of Donald Trump's tax cuts and will see the corporate rate hiked from 21 per cent to 26.5 per cent according to the draft proposal circulating among Democrats on the House Ways and Means Committee.
Out are proposals like one by the Biden administration targeting the ability of the rich to pass assets on to heirs tax-free. Few defend the “stepped up basis at death” provisions the administration wants to restrict, but it has politically powerful advocates, such as farmers, and curbing the tax break was always a long shot.
All of that is good news for the uber rich like Jeff Bezos, who make their money not from fat salaries but because they own businesses that become extremely valuable. Democrats are proposing to toughen one type of wealth tax: the estate tax, by reducing its exemption rate by almost half, to $6 million for couples, and making other changes.
Corporations would pay big, reversing their 2017 gains
Republicans famously slashed the corporate rate to 21 percent from 35 percent as part of the Tax Cuts and Jobs Act. But they also simultaneously created new taxes on big companies’ overseas earnings. The net effect was that big business received a projected $330 billion tax cut, according to Congress’ nonpartisan scorekeepers.
Democrats seek corporate, wealthy tax hikes for $3.5T plan
WASHINGTON (AP) — House Democrats unveiled a sweeping proposal for tax hikes on big corporations and the wealthy to fund President Joe Biden's $3.5 trillion rebuilding plan, as Congress speeds ahead to shape the far-reaching package that touches almost all aspects of domestic life. The proposed top tax rate would revert to 39.6% on individuals earning more than $400,000, or $450,000 for couples, and there would be a 3% tax on wealthier Americans with adjusted income beyond $5 million a year. For big businesses, the proposal would lift the corporate tax rate from 21% to 26.5% on incomes beyond $5 million, slightly less than the 28% rate the president had sought.
Democrats are not proposing to completely reverse that corporate rate cut — they’d push it back up to 26.5 percent. But they are also tightening those taxes Republicans created on multinationals’ foreign profits and adding a few others. The combined result is a $963 billion tax increase on corporations, according to official estimates — which businesses complain is almost three times the tax cuts they received in 2017.
That would come as corporate tax receipts, which plunged after the TCJA, are now rebounding thanks to higher profits. Corporate payments are projected this year to total $268 billion, not that far off from the $297 billion they paid the year before Republicans’ tax cuts took effect.
Democrats would say those official estimates understated how much companies got out of the TCJA because it included tax increases that were likely to be reversed later by Congress. And many don’t think corporations were paying their fair share even before the GOP cuts.
Democrats are also cutting taxes
Their tax increases get all the attention, but Democrats want to cut lots of taxes as well. They want to extend their new monthly Child Tax Credit payment program and make permanent a recent expansion of the Earned Income Tax Credit (though some of those increases technically count as spending, not tax cuts).
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.
They have a long list of clean energy tax breaks, including big new subsidies for buying electric cars, trucks and bikes, along with a host of provisions to do things like promote affordable housing, aid state governments and subsidize the wages of child care workers.
Some of the cuts they've proposed are surprising. Ways and Means Chair Richard Neal (D-Mass.) wants to create a new deduction for union members by allowing them to write off up to $250 in dues. And he has a proposal to help underwrite the wages of local news reporters, with a special payroll tax break for their publishers.
SALT debate left to higher-ups
Neal’s plan does not address the question of what to do about the $10,000 cap on the state and local tax deductions Republicans imposed in 2017, and his committee has no plans to tackle it either. Instead, he's punting the issue up to Pelosi, who will deal with it after Ways and Means approves the rest of the legislation.
The issue has deeply divided Democrats, with lawmakers from high-tax states demanding its repeal, and others blanching at cutting a tax that would mostly benefit the wealthy — and muddle Democrats’ soak-the-rich message.
Pelosi probably won’t unveil a plan to address the cap until shortly before the entire spending and tax plan heads to the House floor, leaving little time for debate. That could also mean there will be some surprise pay-fors added at the last minute to defray the cost of whatever she decides.
Democrats may torpedo their big plan: Shielding billionaire wealth, making it tougher to get aid
Corporate lobbyists fight back — and it looks like Rep. Richie Neal and Sen. Joe Manchin are doing their bidding Bernie Sanders and Joe Manchin Photo illustration by Salon/Getty Images
Easing or eliminating the cap altogether will be expensive, potentially running in the hundreds of billions of dollars. Said a Pelosi spokesperson: “As work continues between the House, Senate and White House on this and other unfinished but critical items, fixing Republicans’ SALT cap attack on progressive state and local governments absolutely remains a priority for House Democrats in the final reconciliation package.”
Plenty of clashes ahead with the Senate
Democrats in the two chambers have been working behind closed doors to narrow their differences, in hopes of expediting consideration, but it’s clear there will be fights on several fronts. Senate Finance Chair Ron Wyden (D-Ore.), for example, wants to do a lot more to go after the wealth of billionaires, proposing among other things an annual tax on their unrealized stock gains.
Under pressure from moderates, Neal also goes easier on multinationals’ overseas earnings than Wyden or the Treasury Department want.
Many of Neal’s colleagues in the House are unhappy with the administration’s proposal to raise taxes on U.S. multinationals by more than what it is asking of other countries to do as part of a push for a global minimum tax. Wyden also wants to impose other taxes on corporations, such as a new levy on stock buybacks.
The two tax writers are also dug in on what to do with a jumble of energy tax provisions. Neal wants to greatly expand existing provisions while Wyden wants to consolidate more than 40 specialized breaks into a few technology-neutral provisions.
But Wyden's ambitions will also run into obstacles from moderates in his own chamber, namely, Manchin and Sen. Kyrsten Sinema of Arizona.
Some surprises from Neal
It’s fair to say Neal is not the darling of the left. Many progressives felt his heart was never in chasing down former President Donald Trump’s tax returns and questioned his commitment to raising taxes as well. Neal himself left plenty of room for such speculation by sitting out other Democratic leaders’ calls for higher taxes on the rich and saying little about his own plans.
In his defense, Neal said he was less interested in giving tax seminars than trying to figure out what combination of tax increases could cover Democrats’ costs while being able to actually pass the House, where Democrats can only afford to lose three votes.
But his $2 trillion in tax increases is bigger than many expected and, combined with other savings from things like increased IRS enforcement, give Democrats an entirely plausible plan to completely pay for $3.5 trillion in new spending. And that could be an effective rejoinder to moderates like Manchin who have expressed concerns about the cost of Democrats’ spending plans.
'Godzilla': Top GOP tax writer says Biden spending package 'most dangerous' he has seen .
A chief architect of the 2017 tax cuts said Democrats’ multitrillion-dollar tax and spending package is the “most dangerous” he has seen during his more than two decades in Congress. © Provided by Washington Examiner Rep. Kevin Brady, the ranking member of the powerful House Ways and Means Committee, told the Washington Examiner that he has been working tooth and nail to fight the proposed $3.5 trillion legislative behemoth, which he said dwarfs spending battles of the past. He lamented the proposal as “tragic.