WASHINGTON (AP) – House Democrats on Monday unveiled a sweeping proposal to raise taxes for big business and the wealthy to fund President Joe Biden’s $ 3.5 trillion reconstruction plan, as Congress accelerates to shaping the far-reaching package that touches almost every aspect of domestic life.
The proposed maximum tax rate would drop to 39.6% for people earning over $ 400,000, or $ 450,000 for couples, and there would be a 3% tax for wealthier Americans with adjusted income. exceeds $ 5 million per year. For large companies, the proposal would lower the corporate tax rate from 21% to 26.5% on income above $ 5 million, slightly lower than the 28% rate the president had called for.
Overall, the tax hikes are in line with Biden’s own proposals and would result in the most substantial changes to the tax code since Republicans with then-President Donald Trump cut taxes in 2017 Businesses and anti-tax groups will certainly oppose it. But Democrats are moving forward.
Representative Richard Neal, D-Mass., Chairman of the Tax Drafting Ways and Means Committee, said the proposals, taken together, “would expand opportunities for the American people and support our efforts to build a healthier and better future. prosperous. “
This is an opening offer at an intimidating time for Biden and his allies in Congress as they assemble the massive package that is set to become one of the most important domestic policy measures under consideration in decades. The President’s âBuild Back Betterâ agenda includes spending on child care, health care, education and strategies to deal with climate change. It is an ambitious undertaking on par with the Great Society or the New Deal.
Republican critics denounce the scale of Biden’s plan, suggesting he is moving towards Western European-style socialism, and in particular they reject the taxes needed to pay him, bristling as that would undo the cuts GOP tax laws that were approved just a few years ago.
Republican Senate Leader Mitch McConnell said the proposal was “the last thing American families need.” All GOP lawmakers should vote against.
But Republicans are largely sidelined as Democrats rely on a budget process that will allow them to approve the proposals themselves, if they can muster their slight majority in Congress.
Democrats have no voice to spare in adopting Biden’s platform, with their weak grip on the House and Senate divided 50-50 and Vice President Kamala Harris the tiebreaker if there is no no Republican support. Democratic leaders in Congress on Wednesday set a target for committees to draft the bill.
A Democratic senator vital to the fate of the bill said the cost will need to be reduced from $ 1 trillion to $ 1.5 trillion to gain his support.
Senator Joe Manchin, DW.Va., suggested it was time for a “strategic break” and warned that there was “no way” Congress would meet the end-of-September goal of the House Speaker Nancy Pelosi, D-Calif., for the passage, given her big differences with the Liberal Democrats on how much to spend and how to pay it.
“I cannot support $ 3.5 trillion,” Manchin said on Sunday, citing in particular his opposition to raising the corporate tax rate above 25%, a figure he says will keep the Globally competitive United States.
Manchin is not alone, as other centrist lawmakers have raised concerns. Reluctant Democrats in heavily taxed and heavily Democratic states like New York, New Jersey and California are pushing for the repeal of the $ 10,000 cap on state and local tax deductions imposed by the Trump Act of 2017. Neal a indicated on Monday that the matter was under serious consideration.
Finding a compromise will be a daunting endeavor as progressives, including Sen. Bernie Sanders, I-Vt., Seek the most robust package possible. As chairman of the budget committee helping to draft the bill, Sanders noted that he and other members of the Liberal flank initially called for an even more robust $ 6 trillion package.
âFor me it’s not a particular number, but it’s about making sure we meet at that time,â said rep Katherine Clark, D-Mass., Executive officer of bedroom. âThe pandemic has shown us that we cannot continue to have an economy of the haves and have-nots. “
The White House has welcomed the preliminary tax plan, which delivers on Biden’s promise not to tax anyone who earns less than $ 400,000. The proposal “makes significant progress in ensuring that our economy rewards work, not just wealth,” Deputy Press Secretary Andrew Bates said.
The House, Senate and White House are working together to align their plans ahead of this month’s deadlines, although some differences emerge that will need to be resolved.
The House tax proposal has been touted as potentially raising some $ 2.9 trillion, a preliminary estimate – but that would go a long way towards paying for the $ 3.5 trillion legislation. The White House is counting on the plan’s long-term economic growth to generate an additional $ 600 billion to make up the difference.
Much of the income generated would come from increasing corporate taxes and higher incomes, raising the personal income tax rate to 39.6% from the current 37%.
As for the wealthy, Neal is proposing an increase in the top capital gains tax rate for those earning $ 400,000 per year or more, to 25% from the current 20%. Inheritance tax exemptions, which were doubled under Trump’s 2017 tax law to now $ 11.7 million for individuals, would come down to $ 5 million.
Tobacco product tax rate increases and a new tax on non-tobacco nicotine issued by electronic cigarettes are also proposed.
The Democrats’ broader plan proposes spending billions to rebuild infrastructure, tackle climate change, and expand or introduce a range of services, from free preschool to dental, vision and hearing care for the elderly.
Congressional committees are scrambling to complete their work to meet this week’s schedule of Pelosi and Senate Majority Leader Chuck Schumer, DN.Y., to get the bill drafted. Pelosi is looking to get a vote in the House by October 1, and then he will go to the Senate. It’s close to the Sept. 27 timeline for voting on a thinner infrastructure plan favored by moderate lawmakers.
Associated Press editors Hope Yen and Josh Boak contributed to this report.