Politics Democrats try delicate tax maneuver for $3.5 trillion bill
Byron York's Daily Memo: $3.5 trillion? Not gonna happen
Welcome to Byron York's Daily Memo newsletter.$3.5 TRILLION? NOT GONNA HAPPEN. Many Democrats began the Biden administration hoping to pass close to $10 trillion in new spending on various progressive causes. That was a staggering number, and there was no way it was going to happen. But the fact is, Democrats have already gotten a lot.
WASHINGTON (AP) — To pay for the massive social plans that President Joe Biden envisions, House Democrats began serious work Tuesday on a maneuver worthy of the most agile circus acrobats. They’re looking to squeeze revenue from the elite 2% of Americans who earn more than $400,000 a year while leaving untouched everyone else — who Biden has pledged won't see any tax increases.
Republicans, as opposed to those tax increases as expected, also turned their anger on Tuesday against proposed tax breaks they portrayed as subsidies for wealthy elites rather than help for the poor and middle class. Electric vehicles became a rallying symbol as class-warfare overtones echoed through a committee session.
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.
The Democrats are proposing that the top tax rate rise back to 39.6% on individuals earning more than $400,000 — or $450,000 for couples — in addition to a 3% surtax on wealthier Americans with adjusted income beyond $5 million a year. For big business, the proposal would lift the corporate tax rate from 21% to 26.5% on companies’ annual income over $5 million.
“Look, I don’t want to punish anyone’s success, but the wealthy have been getting a free ride at the expense of the middle class for too long,” Biden tweeted Tuesday. “I intend to pass one of the biggest middle class tax cuts ever — paid for by making those at the top pay their fair share.”
For middle- and low-income people, tax help, not increase, is on offer as the House Ways and Means Committee digs into debate and drafting of tax proposals to both fund and buttress Biden’s ambitious $3.5 trillion rebuilding plan that includes spending for child care, health care, education and tackling climate change.
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.
It’s an opening bid at a daunting moment for Biden and his allies in Congress as they assemble the “Build Back Better” package considered by some on par with the Great Society of the 1960s or even the New Deal of the 1930s Depression.
The proposals call for $273 billion in tax breaks for renewable energy and “clean” electricity, including $42 billion for electric vehicles and $15 billion for a “green workforce” and environmental items. Increases in the child tax credit to $300 a month per child under 6 and $250 monthly per child 6-17, which came in coronavirus relief legislation earlier this year, would be extended through 2025.
All GOP lawmakers are expected to vote against the legislation. But Republicans are largely sidelined as Democrats rely on a budget process that will allow them to approve the proposals on their own — if they can muster their slight majority in Congress.
House Dems have a $2T tax plan. Here’s what you should know.
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.
Democrats have no votes to spare to enact Biden’s agenda, with their slim hold on the House and the Senate split 50-50 and Vice President Kamala Harris the tiebreaker if there is no Republican support.
But one Democratic senator vital to the bill’s fate, Joe Manchin of West Virginia, says the cost will need to be slashed to $1 trillion to $1.5 trillion to win his support. And Manchin appeared Tuesday to dig in his heels on insisting that parents meet work requirements to receive the child tax credit.
A day earlier, Biden appeared to respond to concerns about the plan’s size, saying the cost “may be” as much as $3.5 trillion and would be spread out over 10 years as the economy grew.
Republican lawmakers, who have denounced the Democratic spending plan as socialist and job-killing, also went after proposed tax breaks on Tuesday.
The Democrats propose to extend to five years the current $7,500 electric vehicle tax credit for five years, with another $4,500 if a car is made by union workers, and $500 more for a U.S.-made battery. But Republicans painted electric vehicles as a bourgeois-bohemian accessory to be subsidized by taxpayers, the latest symbol of excess.
Democrats try delicate tax maneuvers for $3.5 trillion bill
WASHINGTON (AP) — House Democrats began the serious work of trying to implement President Joe Biden’s expansive spending plan, but getting there will require remarkable legislative nimbleness, since Biden has said the revenue to pay for it must come only from Americans who earn more than $400,000 a year. Republicans, who have vowed lockstep opposition to the plan, turned their anger against proposed tax breaks they portrayed as subsidies for wealthy elites rather than help for the poor and middle class. Electric vehicles became a rallying symbol as class-warfare overtones echoed through a committee session.
“Speaking of outrageous green welfare, this bill allows a near-millionaire family to buy a $75,000 Beamer, Jaguar or Benz luxury electric vehicle — and their maid is forced to send them a $12,500 subsidy from her taxes,” said Rep. Kevin Brady of Texas, the panel’s senior Republican. “Why are blue-collar workers, nurses, teachers and firefighters subsidizing the wealthy and big business with a quarter of a trillion dollars in green welfare checks?”
Hold on, said Rep. Dan Kildee, D-Mich. “We’re not going to subsidize the wealthiest buying luxury vehicles.” The legislation does impose caps on the sale price of the vehicle ($55,000 for a sedan) and the income of the buyer ($600,000 adjusted gross income for a head of household.)
The proposal hits another nerve for Republicans, Democrats’ support of labor unions, by adding the incentives for vehicles and batteries manufacture by union workers.
As they slogged through the legislation, members of the majority Democratic committee voted down a series of Republican amendments seeking to tighten the limitations on electric vehicle credits and to eliminate other tax breaks denounced as smacking of progressive Democrats’ proposed “Green New Deal.”
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
The House tax proposal is pitched as potentially raising some $2.9 trillion — a preliminary estimate — which would go a long way toward paying for the $3.5 trillion legislation. The White House is counting on long-term economic growth from the spending plan to generate an additional $600 billion to make up the difference.
To reach the Democrats' goal, much of the revenue raised would come from the higher taxes on corporations and the highest earners, increasing the individual tax rate to 39.6% from the current 37%.
Targeting wealthy individuals, the Democrats propose an increase in the top tax rate on capital gains for those earning $400,000 a year or more, to 25% from the current 20%. Exemptions for estate taxes, which were doubled under a 2017 Republican tax law to $11.7 million for individuals, would revert to $5 million.
In all, the tax hikes are in line with Biden’s own proposals and would bring about the most substantive changes in the tax code since Republicans with then-President Donald Trump slashed levies. Business interests have registered their objections, and lobbying has buzzed.
“Rolling back job-creating tax reforms will slam the brakes on hiring and wage increases,” the U.S. Chamber of Commerce’s chief policy officer Neil Bradley said in a statement. “Every CEO and business leader is concerned about this proposal, and the Chamber strongly opposes it. This reconciliation bill is an existential threat to America’s fragile economic recovery and future prosperity.”
Associated Press writer Matthew Daly contributed to this report.
This week: Democrats face mounting headaches .
Democrats are facing a growing number of headaches, including high-stakes standoffs with Republicans over the debt and feuding within their own party over President Biden's $3.5 trillion spending plan. Democrats are confronting two quickly approaching deadlines: The Sept. 30 cliff to prevent a government funding shutdown and House Democrats' self-imposed timeline for voting on the Senate-passed roughly $1 trillion infrastructure deal. Democrats are set to start to head off the first this week, as House Democrats return from a weeks-long summer break.