Democrats want to raise taxes on the rich and corporations pay a $ 3.5 trillion budget bill

by

President Joe Biden and Congress Democrats have long made it clear that they intend to pay off their wish list by raising taxes on rich and large businesses. But lawmakers have not previously provided details on what this would entail.

The draft proposal, which could still change before it is expected to be officially released on Monday, calls for raising the higher marginal rate of individuals to 39.6%, a percentage higher than the 37% set by the law of Republican tax cuts for 2017, according to a plan circulating Sunday and obtained by CNN.

The rate would apply to people with taxable incomes in excess of $ 400,000 a year and to married couples who file together earning more than $ 450,000 a year.

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

In addition, lawmakers would give a 3% surcharge to people with adjusted gross incomes in excess of $ 5 million.

And it would extend the net investment income tax to cover the net income derived in the ordinary course of a trade or business for single taxpayers with taxable income in excess of $ 400,000 or joint taxpayers with earnings in excess of $ 500,000.

Currently, as part of the Agreable Care Act, some Americans with higher incomes are subject to an additional 3.8% Medicare tax on certain investment income and a 0.9% Medicare surcharge on certain incomes. salaries.

In total, the additional levies for people on high incomes would increase by about $ 1 trillion. Biden has promised that those who earn less than $ 400,000 a year will not see a tax hike.

The proposal also calls for raising the higher corporate tax rate to 26.5%, compared to the current 21% set by the 2017 Republican Tax Reduction Act. It would only apply to companies with incomes above $ 5 million.

Biden had called for raising the corporate rate to 28% to pay for its economic recovery agenda. Prior to the 2017 law, the maximum rate was 35%.

And the House proposal would raise the minimum tax on foreign profits of American companies to 16.5%, from the current 10.5%. Biden had suggested boosting it to 21%.

The plan would also raise several other taxes on the rich and business, among other measures, including modifying rules involving cryptocurrency transactions.

It would also give the Internal Revenue Service $ 80 billion over the next 10 years to enforce taxes on high-income Americans, which the Congressional Budget Office estimates could raise $ 200 billion. And the proposed project would raise an additional $ 700 billion by allowing Medicare to negotiate drug prices and eliminate a controversial drug rebate rule enacted by the Trump administration.

All in all, the measures will raise about $ 2.9 trillion, although the plan warns that “this number remains very preliminary.” If combined with an estimated $ 600 billion in dynamic growth estimated by the White House, the proposal would fully offset the cost of the Democrats ’budget package, according to the editors.

Hitting obstacles with size

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

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

But battles have already erupted within the Democratic party, and West Virginia Sen. Joe Manchin told CNN’s Dana Bash on Sunday that he will not support the $ 3.5 trillion price. Sen. Kyrsten Sinema of Arizona has also indicated she doesn’t support the price, and Sen. Mark Warner of Virginia said in a statement Sunday evening that he believes the spending bill “falls short” because it’s not there. has enough funding for housing assistance.

Manchin’s comments prompted Senator Bernie Sanders, who chairs the budget committee that set recommendations for the master plan, to tell Bash in a separate interview that “it’s not acceptable” for Manchin not to support the bill. .

What the House Democrats are proposing

The ten-year spending plan is the latest step in the Democrats’ push to expand education, health care and child care, address the climate crisis and make more infrastructure investments.

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

The draft legislation that has been drafted by various committees of the House calls for the establishment of a universal early childhood education program for children aged 3 and 4 and a new childcare provision for working families. The proposal would make the community university free for two years and increase the size of the maximum Pell grant award for low-income students.
It would extend the best tax credit for children until 2025 and make reinforced subsidies permanent for the policies of the Affordable Care Act.
Lawmakers are also proposing to add dental, vision and hearing benefits to Medicare and create a federal Medicaid expansion program to cover low-income adults in states that have refused to pass the Economic Care Act provision.

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

This story has been updated with additional information.

.Source