In an effort to placate moderates within the Democratic Party, House Democrats have minimally scaled back President Biden’s tax hikes attempting to secure the needed votes to pass their massive $3.5 trillion social spending package.
On Monday, Democrats released their tax-increase legislation aimed at purportedly paying for their historic spending spree. If it passes, it will ostensibly be one of the largest tax hikes in history.
The bill text that was made public by the House Ways and Means Committee targets the wealthy and big corporations, seeking to raise money to cover the cost of the Democrats’ spending bill that splurges on child care, paid leave, pre-K education, community college, public health insurance plans, household tax credits, green energy incentives, and the liberal pork included in Biden’s Build Back Better agenda.
Democrats see this bill as a way to expand the federal safety net while they control the White House and both chambers of Congress. They have compared it to the New Deal of the 1930s, which gave birth to massive social programs such as Social Security and have brought the nation to the brink of insolvency.
(Video Credit: CNBC Television)
Some progressive groups are already carping that the taxation on the wealthy does not go far enough.
“They have a once in a lifetime opportunity to address the egregious, unfair treatment that the wealthy get in the tax code, and the committee has refused to do it,” Erica Payne, who is the president and founder of Patriotic Millionaires, declared according to The Hill.
“They failed. It’s that simple,” Morris Pearl, chair of Patriotic Millionaires and a former managing director at the investment firm BlackRock, said in a statement according to HuffPost. “This is not what the American people voted for when they elected Joe Biden as President.”
The Ways and Means Committee wants to raise the corporate tax rate for income over $5 million from 21 percent to 26.5 percent. Biden wanted a 28 percent corporate tax rate.
The committee also called for bumping the top capital gains rate from 20 percent to 25 percent. Biden wanted it increased even more. Biden’s proposal to tax capital gains at death has also been slashed from the bill.
The carried interest tax break benefiting investment fund managers would be limited but not eliminated as Biden said he wanted it to be. U.S. corporations’ foreign earnings would also reportedly not be taxed as much as the president requested.
Having said that, the tax increases would be monstrous. And the committee’s bill goes further than Biden asked in some areas. The president wanted the top individual tax rate to go from 37 percent to 39.6 percent. The Ways and Means Committee obliged and will also impose a 3 percent surtax on individuals’ income above $5 million.
The IRS would also get $80 billion out of this deal for tax enforcement and updating its technology.
Committee Chairman Richard Neal (D-MA) proclaimed in a statement that the panel is “responsibly funding” the left’s spending plans.
White House Principal Deputy Press Secretary Karine Jean-Pierre called it a “first step.” She claimed in a statement that it furthers Biden’s goals of cutting taxes for families, repealing former President Trump’s tax cuts that benefited the wealthy and corporations, and does not raise taxes on families making less than $400,000.
Conservatives are warning that the massive tax increases would harm the U.S. economy.
Democrats’ $3.5T budget will result in the highest tax increases in American history.
These tax hikes will impact every American and only further cripple our recovery coming out of the pandemic.
— Ways and Means GOP (@WaysandMeansGOP) September 12, 2021
“Any increase in America’s globally competitive corporate rate would position our country even further behind global competitors like China — and carry devastating consequences for American workers,” the RATE Coalition said in a statement.
Any increase in America's corporate tax rate "would position our country even further behind global competitors…and carry devastating consequences for American workers"
Read our statement on the proposal to raise the corporate rate to a combined 31%:https://t.co/k65BSEjOv6
— RATECoalition (@RATECoalition) September 13, 2021
The Joint Committee on Taxation estimates that the tax increases will raise nearly $2.1 trillion over 10 years.
A document was passed around on Sunday that asserts that Democrats would cover the cost of the remainder of the $3.5 trillion through savings from drug-pricing adjustments and through economic growth that would allegedly be generated by their spending package according to The Hill.
The spending bill still has an uphill battle since almost every House Democrat as well as every Senate Democrat will have to vote for it to pass. That is why concessions are being made. Republicans are not even being considered in the Democrats’ calculations for passage of the bill.
Senate Majority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA) plan to pass the legislation through the budget reconciliation process without Republican support.
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