Baltimore Sun

Dems set a path to pay for $3.5T plan

Higher tax rates for big corporatio­ns, the wealthy unveiled for massive package

- By Hope Yen and Lisa Mascaro

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-Mass., the chairman of the tax-writing Ways and 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 single measures considered in some time, if ever. The president’s “build back better” agenda includes spending on child care, health care, education and strategies to confront climate change. It is a sweeping undertakin­g, on par 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-W.Va., also cautioned there was “no way” Congress will meet the late September goal from House Speaker Nancy Pelosi, D-Calif., 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 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 longterm economic growth to be sparked by the legislatio­n to generate an additional $600 billion to make up the difference.

Much of the revenue raised would come from the higher taxes on corporatio­ns and the highest earners — more than $450,000 for married couples filing jointly, to 39.6% from the current 37%.

Pressed repeatedly about a price tag he could support, Manchin said, “It’s going to be $1, $1.5 (trillion).” He suggested the range was based on a modest rise in the corporate tax rate to 25%, a figure he believes will keep the U.S. globally competitiv­e.

But Sen. Bernie Sanders, the Vermont independen­t who chairs the Senate Budget Committee and is helping craft the measure, noted that he and other members of the liberal flank in Congress had initially urged an even more robust package of $6 trillion.

“I don’t think it’s acceptable to the president, to the American people or to the overwhelmi­ng majority of the people in the Democratic caucus,” Sanders said. He added: “I believe we’re going to all sit down and work together and come up with a $3.5 trillion reconcilia­tion bill which deals with the enormously unmet needs of working families.”

The current blueprint proposes billions for rebuilding infrastruc­ture, tackling climate change and expanding or introducin­g a range of services, from free prekinderg­arten to dental, vision and hearing aid care for older people.

Manchin voted last month to approve a budget resolution that set the figure, though he and Sen. Kyrsten Sinema, D-Ariz., have expressed reservatio­ns about the top-line amount. All of it would be paid for with taxes on corporatio­ns and the wealthy.

Congressio­nal committees have been working hard this month on slices of the 10-year proposal in a bid to meet this week’s timeline from Pelosi and Senate Majority Leader Chuck Schumer, D-N.Y., to have the bill drafted.

 ?? J. SCOTT APPLEWHITE/AP ?? Sen. Joe Manchin, D-W.Va., center, shown Saturday with Rep. Sheila Jackson Lee, D-Texas, and Rep. Mike Thompson, D-Calif., has said that President Joe Biden’s $3.5 trillion spending plan will have to be pared back.
J. SCOTT APPLEWHITE/AP Sen. Joe Manchin, D-W.Va., center, shown Saturday with Rep. Sheila Jackson Lee, D-Texas, and Rep. Mike Thompson, D-Calif., has said that President Joe Biden’s $3.5 trillion spending plan will have to be pared back.

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