Democrats seek to raise taxes on wealthy and corporations to foot $ 3.5 trillion budget bill

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President Joe Biden and the Democrats in Congress have long made it clear that they intend to pay for their wishlist by raising taxes for the rich and big business. But lawmakers have yet to provide details on what that would entail.

The draft proposal, which could change further before being officially released on Monday, calls for raising the top personal marginal rate to 39.6%, from 37% set by the Republicans’ tax cut law of 2017. , according to a plan circulating Sunday and obtained by CNN.

The rate would apply to people with taxable income over $ 400,000 per year and to married couples reporting jointly earning more than $ 450,000 per year.

The maximum rate of capital gains would increase to 25%, instead of 20%.

In addition, lawmakers would impose a 3% surtax on people whose adjusted gross income exceeds $ 5 million.

And it would expand the net investment income tax to cover net income earned in the ordinary course of a trade or business for single taxpayers with taxable income greater than $ 400,000 or joint filers with incomes greater than $ 500,000.

Currently, under the Affordable Care Act, some high-income Americans are subject to an additional 3.8% Medicare tax on certain investment income and a 0.9% Medicare surtax on wages.

In total, the additional levies on high-income people would bring in around $ 1 trillion. Biden promised those who earn less than $ 400,000 a year would not see a tax hike.

The proposal also calls for increasing the maximum corporate tax rate to 26.5%, from the 21% currently set by the Republicans’ 2017 tax cut law. It would only apply to businesses with revenues over $ 5 million.

Biden had called for raising the corporate rate to 28% to pay for his economic recovery program. Before the 2017 law, the maximum rate was 35%.

And the House’s proposal would raise the minimum tax on foreign income for U.S. businesses to 16.5%, from the current 10.5%. Biden had suggested raising it to 21%.

The plan would also increase various other taxes on the wealthy and businesses, among other measures, including changing the rules regarding cryptocurrency transactions.

It would also give the Internal Revenue Service an additional $ 80 billion over the next 10 years for tax enforcement for high-income Americans, which the Congressional Budget Office says could raise $ 200 billion. And the proposal foresees that it would raise an additional $ 700 billion by allowing Medicare to negotiate drug prices and by eliminating a controversial drug reimbursement rule passed by the Trump administration.

In total, the measures would bring in around $ 2.9 trillion, although the plan warns that “that number remains very preliminary.” Combined with dynamic revenue growth estimated at $ 600 billion estimated by the White House, the proposal would fully offset the cost of the Democrats’ budget package, according to the editors.

Overcome obstacles on the waist

Aware that they will not get any Republican support for their massive expansion of the country’s safety net system, Democrats plan to push the package through the reconciliation process, which does not require a GOP vote in the Senate.

Thirteen House committees are drafting the legislation that will constitute the massive package in the coming days, with the aim of submitting detailed bills by Wednesday. Democratic leaders hope to hold a floor vote later this month.

But battles have already broken out within the Democratic Party, with West Virginia Senator Joe Manchin telling CNN’s Dana Bash on Sunday that he would not support the $ 3.5 trillion price tag. Arizona Senator Kyrsten Sinema also indicated she did not support the award, and Virginia Senator Mark Warner said in a statement Sunday night that he believed the spending bill “was insufficient” because there was not enough funding for housing assistance.

Manchin’s comments prompted Senator Bernie Sanders, who chairs the budget committee that made recommendations for the comprehensive plan, to tell Bash in a separate interview that it is “not acceptable” for Manchin not to support The law project.

What the House Democrats are proposing

The 10-year spending plan marks the latest step in Democrats’ drive to expand support for education, health care and childcare, tackle the climate crisis and invest more in infrastructure.

Party leaders hope to use the annual budget process to push through many of the measures envisioned in Biden’s jobs and families proposals that the Republican opposition has blocked.

The bill drafted by various House committees calls for the establishment of a universal pre-kindergarten program for 3 and 4 year olds and a new child care benefit for working families. The proposal would make community colleges free for two years and increase the size of the maximum Pell Grant for low-income students.
It would extend the improved child tax credit until 2025 and make the strengthened grants for Affordable Care Act policies permanent.
Lawmakers are also proposing to add dental, visual and hearing benefits to Medicare and create a federal expansion program for Medicaid to cover low-income adults in states that have refused to pass the provision of the Act. affordable care.

It also contains multiple provisions to fight climate change and invest in infrastructure and jobs.

This story has been updated with additional information.

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