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Politics Top Democrat Says Biden Inheritance-Tax Plan Short of Votes

06:40  15 september  2021
06:40  15 september  2021 Source:   bloomberg.com

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(Bloomberg) -- The top House Democrat overseeing tax policy said Tuesday that President Joe Biden’s plan to substantially raise taxes on inherited assets lacks sufficient support in the lower chamber, further dimming its chances of inclusion in a $3.5 trillion economic package.

“There were enough that raised questions about it,” House Ways and Means Chairman Richard Neal told reporters following a third day of committee sessions to advance parts of the Democrats’ economic and social-spending proposals. “The issue here is very simple and the arithmetic here is very defiant. And that is getting to 218 votes,” he said, referring to the number amounting to a majority in the House.

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Top Democrat Says Biden Inheritance - Tax Plan Short of Votes . Representative Alexandria Ocasio-Cortez said she would introduce a bill to reinstate federal unemployment benefits programs that expired last week, despite a lack of appetite to do so among many of congressional Democrats . “I’ve been very disappointed on both sides of the aisle that we’ve just simply allowed pandemic unemployment assistance to completely lapse when we are clearly not fully recovered from the cost effects of the pandemic,” the New York Democrat said during a virtual town hall on Tuesday evening.

House Democrats on Monday revealed a package of tax hikes on corporations and the rich without President Joseph Biden 's proposed levy on inherited property at death, according to an outline from the Ways and Means Committee. Currently, heirs may delay taxes on inherited gains until they sell the property. They also receive a tax provision, the so-called step-up in basis, adjusting the asset's purchase price to the value on the date of death, saving taxpayers billion per year, according to an estimate from the Joint Committee on Taxation. Biden has called for treating inheritances like a sale

Richard Neal wearing a suit and tie sitting in a chair: House Ways And Means Committee Holds Markup On Build Back Better Act © Bloomberg House Ways And Means Committee Holds Markup On Build Back Better Act

Neal, a Massachusetts Democrat, plans to wrap up the committee’s debate of tax policies and other provisions within its jurisdiction Wednesday.

Biden’s proposal to end a tax break on inheritances known as “step-up in basis,” which wipes out the capital gains tax on assets when the owner dies, was already facing obstacles even before the House committee left the provision out of its draft tax legislation released Monday.

The plan had been central to Biden’s efforts to overhaul capital gains taxes as part of a broader effort among progressives to equalize treatment of employment income with investment income, and achieve a top capital gains rate of 39.6% before a surtax on top earners.

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A blueprint of tax proposals released by House Democrats on Monday fell short of President Joe Biden ’s targets for corporate and capital gains taxes . But knowing that this in fact apparently pays for itself at least through the eyes ofHouse Democrats might give him a little bit of cover. Manchins' Not the only one though giving us a sense of how tenuous all ofthis is. Senator Mark Warner of Virginia a Democrat threatened last night to vote against all of this if it didn't have moremoney for affordable housing.

WASHINGTON (Reuters) - U.S. tax code changes sought by Democrats in the House of Representatives to help finance .5 trillion in domestic investments would cut annual tax bills for Americans earning less than 0,000 a year through 2025, a congressional estimate showed on Tuesday. Democrats in coming weeks are trying to push the .5 trillion bill through Congress to carry out President Joe Biden 's agenda of expanding social services for the elderly, children and others and to address climate change. They have pledged to offset the costs mainly through tax increases

Read more: Biden Allies Shy From Taxing Rich, Eroding Inequality Pledge

The House committee instead proposed raising to raise the top long-term capital gains rate to 25% from 20%. The House Democratic leadership could still insert changes after the committee passes its draft and before the entire chamber votes on the legislation. Yet Neal’s exclusion of the measure from his own committee’s proposal, along with his latest remarks, indicate a last-minute addition of the capital gains overhaul is highly unlikely.

“I heard from a lot of constituents about step-up-in-basis,” Virginia Representative Don Beyer, a Democrat on the committee, told reporters during a brief break from debate on the bill.

While Senate Finance Committee Chairman Ron Wyden has hinted at addressing step-up in basis, such a gesture faces opposition from moderate Democrats in the upper chamber. Farm-state lawmakers have voiced particular concern about doing away with tax-free transfers of inherited assets, even though family farms were specifically marked out as an exception by Biden.

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House Democrats have drafted a package of tax increases that falls short of President Joe Biden ’s ambition, an acknowledgment of how politically precarious the White House’s .5 trillion economic agenda is for party moderates. The Democratic proposal would raise the top corporate tax rate from 21 per The panel is set to debate the tax portions of the bill Tuesday and Wednesday. Surtax on rich. Earlier, West Virginia Senator Joe Manchin, a moderate Democrat whose vote is crucial in the evenly split upper chamber, renewed his objections to the .5 trillion tax -and-spending reconciliation plan .

- Boosts the top individual tax rate to its pre-2017 level of 39.6%, from 37% currently, for taxable income above 0,000 for individuals and 0,000 for married couples. Biden proposed the same top rate, but kicking in at higher thresholds of 2,700 for individuals and 9,300 for married couples. The expanded exemption would now expire at the end of this year. - Adds other changes to capture revenue from inheritance of nonfarm and nonbusiness assets held by grantor trusts or in partial ownership. But it excludes Biden 's proposed elimination of the "step-up" in valuation of estate

Democrats can’t afford to lose any votes in the evenly split Senate. House Democrats are unlikely to vote on a measure they know could be stripped out by the other chamber and could later prove politically damaging.

“This is not about putting on tax seminars and telling everyone what you’re for, this is about getting to 218,” Neal said.

Read more: Biden’s Tax Hike Push Will Depend on This ‘Insider’s Insider’

Even with some of the Democrats’ proposals falling short of Biden’s ambitions, White House National Economic Council director Brian Deese hailed the broader momentum on Tuesday, saying lawmakers were making “major progress” with their efforts to increase taxes on corporations and the wealthy.

The package offered by Democrats on the Ways and Means Committee is “not everything that the president called for, but gets at the core issues we face in our tax code,” Deese said Tuesday during an interview on Bloomberg Television’s “What’d You Miss.”

SALT Quandary

Other outstanding items still being hashed out in the House include a Biden-proposed requirement on banks and other financial institutions to proactively report their customer account and transaction information to the Internal Revenue Service as part of an effort to collect more unpaid taxes, and whether to partly or fully reinstate the state and local tax deduction, or SALT, that many House Democrats ran on restoring in 2018.

Reinstating the deduction, a priority for several members, could take budgetary space away from other Democratic priorities and has contributed to intraparty tension during the negotiation process over the broader multitrillion-dollar package that Democrats hope to pass this fall.

Beyer acknowledged the bank reporting requirement, seen as key part of a two-pronged approach to collect more taxes along with increased IRS enforcement funding, also faced headwinds in the chamber. But the idea of changing how capital gains taxes fall on inheritance, “seems more dead,” Beyer said.

(Updates with additional comments, background, starting in eighth paragraph.)

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usr: 28
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