Tax Increases for Wealthy and Businesses Outlined by House Democrats
In Washington, Senior House representatives are working together to create a draft proposal that could potentially raise $2.9 trillion to pay for most of President Biden’s expansion of the social safety net. They propose raising the corporate tax rate to 26.5 percent for the richest businesses and imposing an additional surtax on individuals who make more than $5 million. This plan is a critical step for advancing the $3.5 trillion package. While it is unclear if the entire House tax-writing committee supports the proposal, it suggests plans to undo key components of the 2017 Republican tax law. But the revenue provisions outlined fall short of fully financing the entire package the Democrats are putting together. People briefed on the details cautioned that the plan was still in flux. The committee is scheduled to convene to continue work on the legislation.
Infrastructure Bill outline highlights:
- $1 trillion package passed on August 10th, which capped weeks of intense negations and debates over the largest federal investment in the nation’s public works system over more than a decade.
- The final tally in the Senate was 69 for and 30 against. This legislation, which still must pass the House, would touch nearly every facet of the American economy, and fortify the nation’s response to the warming of the planet.
- The bipartisan plan focuses spending on transportation, utilities, and pollution cleanup.
- About $110 billion would go to roads, bridges, and other transportation projects; $25 billion for airports; and $66 billion for railways.
- Senators have also included $65 billion meant to connect hard-to-reach rural communities to high-speed internet and help sign up low-income city dwellers who cannot afford it, and $8 billion for Western water infrastructure.
- Roughly $21 billion would go to cleaning up abandoned wells and mines, and Superfund sites.
The proposal would raise the corporate tax rate to 26.5 percent from 21 percent for businesses that report more than $5 million in income. The corporate tax rate would be lowered to 18 percent for small businesses that make less than $400,000 and remain at 21 percent for all other businesses. While the president originally wanted to raise the corporate tax to 28 percent, both parties have resisted. To help raise the $900 billion from taxes on corporations, congress has suggested additional changes to the tax code to push the minimum taxes for corporate income as well as crack down on multinational companies shifting profits to tax havens.
Representatives are also considering an increase to the top marginal income tax rate to 39.6 percent from 37 percent for households that report taxable income over $450,000 and for unmarried individuals who report more than $400,000. As for those who make more than $5 million, the proposal would impose a 3 percent surtax, which is expected to raise $127 billion. It also increases the top tax rate for capital gains — the proceeds from selling an asset like a boat or stocks — to 25 percent from 20 percent. This would provide about $80 billion over the next decade for the IRS to beef up tax enforcement, which would raise about $200 billion.
While the draft outline adhered to Mr. Biden’s pledge to avoid raising taxes on Americans who make less than $400,000, it suggests increasing the tax rate for tobacco products and imposing a tax on other products that use nicotine. This would bring in an estimated $96 billion. The document also outlines the possible inclusion of drug pricing provisions and changes in tax rules to treat cryptocurrency the same as other financial instruments.
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