In other areas, it seems the committee is only glancing at the richest Americans. Former President Barack Obama, Mr. Trump and Mr. Biden have vowed to close the so-called vested interest gap, in which private equity managers pay low capital gains taxes on commissions they charge customers, claiming that Money is not income because it is obtained from the investment gains of its clients.
Senate Democrats have proposed closing the gap completely, saving the Treasury $ 63 billion in ten years. The House proposal would limit the practice and force Wall Street financiers to withhold their clients’ investment gains for five years before claiming them as capital gains and receivables. It would save $ 14 billion, a fraction of the Senate proposal.
Another element that is missing from the House plan: a measure to tax inheritances more aggressively. Mr. Biden and many other Democrats want them to tax assets such as shares and real estate when they are inherited by wealthy heirs, based on the gain in value from the time the original owner bought them. According to current legislation, these assets are taxed on capital gains only when they are sold, according to their value when they were inherited, allowing all the gain of value throughout the life of the super-poor not to be taxed as long as it is passed on to the heirs.
But the new proposal faced a fierce lobbying campaign, led by rural Democrats like former Senators Heidi Heitkamp of North Dakota and Max Baucus of Montana. Representative Richard E. Neal of Massachusetts, the Democratic chairman of the Forms and Media Committee, set it aside.
For some liberals, Mr. Neal’s pragmatism felt more like a surrender.
“American billionaires show up Champagne tonight as the House Ways and Means Committee, led by President Richie Neal, fails the president, fails the country and fails history,” said Erica Payne, president of Patriotic Millionaires, a group of wealthy liberals who embrace much higher taxes on the rich.
Some Democrats expressed surprise Monday about Neal’s political calculations.
“A wealth tax? I don’t know anyone who says this doesn’t work for them politically, ”said Rep. Donald S. Beyer Jr., a Virginia Democrat and committee member.
But with Sen. Joe Manchin III, a West Virginia Democrat, who suggested the final package might have to be half of the House plan, Beyer said he understood why Democratic leaders didn’t want to make the vulnerable legislators would accept the most aggressive options. .