The billionaire tax is met with criticism; big evolving Biden plan
Democrats’ idea of ââa new billionaire tax to help pay for social services and President Joe Biden’s climate change plan was quickly criticized as being too onerous, with some lawmakers preferring the original plan of simply raise the highest tax rates on corporations and the wealthy.
With the revenue side of the package in motion deeply, Democrats have stalled trying to wrap up negotiations on Biden’s comprehensive package. But party leaders insisted on Tuesday that a broad deal remained within reach as they rushed to show progress ahead of the president’s departure later this week for world summits abroad.
House Speaker Nancy Pelosi told lawmakers at a caucus meeting they were on the verge of “something major, transformative, historic and greater than anything else” ever attempted in Congress, according to a person who requested anonymity to share the private remarks.
Senate Majority Leader Chuck Schumer opened the Senate with a simple message: âWe are working to make it happen. “
However, big differences between Democrats remain over the basic outlines of the radical proposal and how to pay for it. It is now estimated to be at least $ 1.75 trillion over 10 years, and could still be more.
Resolving the revenue side is critical as Democrats slash what was a $ 3.5 trillion plan, insisting that all new spending will be fully paid and not pile up on debt. Biden swears any new taxes would only hit the rich, those who earn more than $ 400,000 a year, or $ 450,000 for couples.
The White House had to rethink its tax strategy after a key Democrat, Sen. Kyrsten Sinema, D-Arizona, opposed his party’s initial proposal to raise tax rates for wealthy Americans by rescinding the Trump-era tax cuts on those earning more than $ 400,000. Sinema also opposed lifting the 21% corporate tax rate. With a Senate at 50-50, Biden has no voice to spare in his party.
Instead, to convince Sinema and others, the White House launched a new idea of ââtaxing billionaire assets and one that would require companies to pay a minimum tax of 15% whether they do or not. benefits. These both appear to be gaining ground with another pivotal Democrat, Sen. Joe Manchin, DW.Va., who told reporters he supported new ways to ensure the rich pay their “fair share.”
Democrats on the Senate Finance Committee, led by Senator Ron Wyden of Oregon, are ready to roll out the tax revenue plan within days. It is likely to include other income-generating tax measures, including a plan to strengthen the IRS to fight tax evasion.
âHere’s the heart of the matter: Americans have read in recent months that billionaires pay little or no tax for years,â Wyden told Capitol Hill.
The Billionaire Tax is modeled on a 2019 Wyden bill to treat assets as income. Another idea, up to an ultra-rich 3% surtax, was proposed by Senator Elizabeth Warren, D-Mass.
Under Wyden’s emerging plan, the billionaire tax would hit the richest American, less than 1,000 people. This would force those with assets of more than $ 1 billion, or consecutive income of $ 100 million over three years, to pay taxes on earnings from stocks and other marketable assets, rather than waiting for them. assets are sold.
A similar billionaire tax would be applied to non-marketable assets, including real estate, but it would be deferred with unassessed tax until the asset has been sold.
Overall, the billionaire tax rate has not been set, but it should be at least equal to the 20% capital gains rate. Democrats have said it could generate $ 200 billion in revenue that could help fund Biden’s 10-year program.
Republican Senate Leader Mitch McConnell called it a “foolish plan” and warned of drying up incomes in the event of a downturn. Some Republicans have indicated that such a tax plan could be challenged in court.
But senior Democratic colleagues are also raising concerns, saying the idea of ââsimply undoing the 2017 tax cuts by raising the highest rates was more straightforward and transparent.
Under the House Ways and Means Committee bill, the top tax rate would drop from 37% to 39.6% for those earning over $ 400,000, or $ 450,000 for those earning more than $ 400,000. couples. The corporate rate would drop from 21% to 26.5%. The bill also proposed a 3% surtax on the richest Americans with adjusted income above $ 5 million per year.
Panel chair Representative Richard Neal, D-Mass., Said Monday evening that he told Wyden that implementing the billionaire’s plan proposed by the senator was “a little more difficult.”
Neal suggested that the House proposal was not on the table despite Sinema’s objections. In fact, he said, “our plan is getting better every day.”
Once Democrats agree to the tax proposals, they can assess how much funding is available for Biden’s comprehensive agenda to expand healthcare, child care, and other climate change programs.
“We’re almost there,” White House press secretary Jen Psaki said on Tuesday.
Democrats were hoping Biden could cite major accomplishments to world leaders later this week. They also face an Oct. 31 deadline to adopt a $ 1,000 billion bipartisan infrastructure package for roads, broadband and other public works before routine federal transportation funds expire.
After months of start-and-stop negotiations, disputes persist over large-scale investments as Democrats scramble to resolve disputes between centrists and progressives that have blocked the bill.
Among the unresolved provisions: plans to expand Medicare coverage with dental, vision and hearing benefits for the elderly; childcare assistance; free preschool; and a new four-week paid family leave program.
The White House has launched a new climate change strategy strengthening incentives for agricultural and industrial sites to use cleaner energy sources after Manchin rejected an earlier plan.
Pelosi said she expected a deal by the end of the week, paving the way for a House vote on the bipartisan $ 1,000 billion infrastructure bill. The Senate had approved this over the summer, but the measure was blocked during deliberations on the broader Biden bill.
But Representative Pramila Jayapal, D-Wash., Chair of the Congressional Progressive Caucus whose support will be crucial for both bills, said lawmakers wanted more than just a framework for Biden’s plan before voting for it. smaller infrastructure package.
“We want the entire bill,” Jayapal told The Associated Press. âWe want to vote on both bills at the same time. “
Associated Press editors Farnoush Amiri, Hope Yen, and Colleen Long contributed to this report.