The House Ways and Means Committee Democrats are working to finish their proposal for $2.9 trillion tax increases, which would be the largest tax increase in decades. This is to pay for increased spending in their “reconciliation” package, Politico reported Monday.
The Wall Street Journal reported the proposal would include increasing the corporate tax rate from 21% to 26.5% and enacting an individual surtax of 3 percentage points on incomes above $5 million.
The House Democrats also plan to increase the minimum income tax for U.S. businesses to 16.5%, from 10.5%. They will also consider raising the capital-gains tax rate from 23.8% to 28.8%.
These proposals are significant because the House Democrats have been vague about their plans for tax increases. They want to avoid angering either moderates or progressives who are concerned about the economic effects of raising taxes.
Richard Neal, Chairman of the Committee, stated that it was too early to provide details about the tax increase. This could allow for opposition to grow.
These proposals will be unveiled informally sometime this week. This would mark a significant step forward for Democrats, as they try to plan for the most important legislation under the Biden administration.
A five-page memo was also circulated about the Democrats’ plans. It includes tightening estate tax rules, reducing deductions for unincorporated businesses, new limits on supersized individual pension accounts, new restrictions on deductions companies take to compensate highly compensated employees, new “wash sale” rules for people who own cryptocurrency.
The Wall Street Journal noted that tax increases have a monetary value. It includes $1 trillion in tax increases for individuals, $900 Billion on corporations, $700 Billion from drug-pricing policies changes, and $120 Billion from tighter tax enforcement. Add miscellaneous changes to the equation and you get $3.5 trillion.
Andrew Bates, White House spokesperson, praised Neal’s proposals and stated that “this achieves two core goals that President Obama laid out at the start of this process — it doesn’t raise taxes for Americans earning less than $400,000 and it repeals core elements of Trump’s tax giveaways to the wealthy and corporations.”
Bates stated that “the President looks forward to continuing to work with Chairman Neal, as well as the Senate Finance Committee and Chairman Wyden, as we advance the Build Back Better agenda.”
