Democrats seek corporate, wealthy tax hikes for $3.5T plan
WASHINGTON – House Democrats unveiled a sweeping proposal Monday 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 couples earning more than $450,000, and there would be a 3% tax on wealthier Americans making beyond $5 million a year. For big businesses, the proposal would lift the 21% corporate tax rate to 26.5% on incomes beyond $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 taxes in 2017. Business and anti-tax groups are sure to object. But Democrats are pressing forward.
Rep. Richard Neal, D-massachusetts, chairman of the tax-writing Ways & Means Committee, said taken together, the proposals would “expand opportunity for the American people and support our efforts to build a healthier, more prosperous future.”
It’s a daunting moment for Biden and his allies in Congress as they assemble the massive package that is destined to become one of the largest singles measures considered in some time, if ever. The president’s “build back” agenda includes spending on child care, health care, education and strategies to confront climate change. It is a sweeping undertaking, on part with the Great Society or New Deal.
One Democratic senator vital to the bill’s fate says the cost will need to be slashed to $1 trillion to $1.5 trillion to win his support.
Sen. Joe Manchin, D-west Virginia, also cautioned there was “no way” Congress will meet the late September goal from House Speaker Nancy Pelosi, D-california, for passage given his current wide differences with liberal Democrats on how much to spend and how to pay for it.
“I cannot support $3.5 trillion,” Manchin said Sunday, citing in particular his opposition to a proposed increase in the corporate tax rate from 21% to 28% and vast new social spending. “We don’t have the need to rush into this.”
Democrats have no votes to spare if they want to enact Biden’s massive “Build Back Better” agenda, with the Senate split 50-50 and Vice President Kamala Harris the tiebreaker if there is no Republican support. Democratic congressional leaders have set a target of Wednesday for committees to have the bill drafted.
The White House welcomed the preliminary tax plan, which “makes significant progress towards ensuring our economy rewards work and not just wealth,” said deputy press secretary Andrew Bates.
“This meets two core goals the President laid out at the beginning of this process – it does not raise taxes on Americans earning under $400,000 and it repeals the core elements of the Trump tax giveaways for the wealthy and corporations,” he said in a statement.
The proposal was pitched as potentially raising some $2.9 trillion – but that’s a preliminary estimate. That would go a long way toward paying for the $3.5 trillion legislation. The White House is counting on long-term economic growth to be sparked by the legislation to generate an additional $600 billion to make up the difference.