Fending off skeptics of the past, Senate Democrats on Wednesday unveiled a new billionaire tax proposal, a brand new entry into the tax code designed to help pay for President Joe Biden’s broad domestic policy agenda and bring his party closer to ‘a global agreement.
The proposed tax would hit the earnings of those with more than $ 1 billion in assets or income of more than $ 100 million a year, and it could begin to bolster the grand social services and anti-social services plan. climate change that Biden is working to complete before leaving this week. for world summits.
The new billionaires’ proposal, coupled with a new 15% minimum corporate tax, would provide alternative revenue streams Biden needs to win over a key Democrat, Arizona Senator Kyrsten Sinema, who had rejected the idea. previous party to reverse the Trump-era tax breaks on corporations and the wealthy to increase incomes.
Biden met Sinema and fellow Democrat Senator Joe Manchin of West Virginia on Tuesday evening at the White House.
“No senator wants to stand up and say, ‘I think it’s fine for billionaires to pay little or no tax for years,'” said Democratic Senator Ron Wyden of Oregon, chairman of the Senate Finance Committee, leading the new effort.
Biden and his party are focused on at least $ 1.75 trillion in health care, child care and climate change programs, slashing what was a $ 3.5 trillion plan, while they are trying to conclude negotiations this week.
Together, the new billionaire tax and the 15% corporate minimum tax are designed to meet Biden’s desire that the rich and big corporations pay their “fair share.” They also match his promise that no new taxes hit those earning less than $ 400,000 a year, or $ 450,000 for couples. Biden insists that all new spending will be fully paid, not accumulated on the national debt.
While the new tax proposals have seemed pleasing to Manchin and could win over Sinema, whose support is needed in the 50-50 split Senate where Biden has no voice to spare, the idea of the billionaire tax has been criticized. by other Democrats as bulky or worse.
Representative Richard Neal, D-Mass., Chairman of the Ways and Means Committee, said he told Wyden that the billionaire tax may be more difficult to implement than the route his panel took to simply increase corporate and wealthy rates.
As part of Wyden’s emerging plan, the billionaire tax would hit America’s richest, fewer than 800 people, starting in fiscal year 2022, according to a person familiar with the plan who insisted on anonymity for to discuss.
This would force those with assets of more than $ 1 billion, or three consecutive years of income of $ 100 million, to pay taxes on earnings from stocks and other marketable assets, rather than waiting for the holdings. be sold.
A similar tax for billionaires would be applied to non-marketable assets, including real estate, but it would be deferred with unassessed tax until the asset is sold, although interest would have to be paid.
Overall, the billionaire tax rate would align with the capital gains rate, now 23.8%. Democrats have said it could generate $ 200 billion in revenue that could help fund Biden’s 10-year program.
“I’ve been talking about this for years,” said Senator Elizabeth Warren, D-Mass., Who campaigned for the presidency on a wealth tax, and supports Wyden’s approach. “I even made billionaires cry about it.”
Republicans ridiculed the billionaire tax as “insane” and some suggested it would face a legal challenge.
And senior Democratic colleagues have also raised concerns about the billionaire tax, saying the idea of simply undoing the 2017 tax cuts by raising the highest rates was more straightforward and transparent.
Under the House bill approved by Neal’s panel, the top tax rate would drop from 37% to 39.6% for those earning more than $ 400,000 per year, or $ 450,000 for couples. The corporate rate would drop from 21% to 26.5%. The bill also proposes a 3% surtax on the richest Americans with adjusted income in excess of $ 5 million per year.
With Sinema rejecting the House’s approach to taxes and Manchin planning the new spending on programs, the senators did a double blow, upsetting Biden’s overall plan.
It also required difficult cuts, if not outright elimination, of policy priorities – from paid family leave to child care to dental, vision and hearing benefits for the elderly.
Once cumbersome climate change strategies are also losing weight, shifting away from punitive measures against polluters who have raised objections from the Manchin coal state, in favor of incentives to reward clean energy .
Manchin’s resistance could derail another tax idea – a plan to give the IRS more resources to prosecute tax evaders. He said he told Biden at their weekend meeting at the president’s home in Delaware that the plan was “angry” and would allow the government to monitor bank accounts.
All in all, Biden’s package remains a significant undertaking – and could still exceed $ 2 trillion in perhaps Congress’ largest such effort in decades. But it’s much thinner than what the president and his party initially envisioned.
House Speaker Nancy Pelosi told lawmakers in a closed-door meeting on Tuesday that they were on the verge of “something major, transformative, historic and greater than anything something else “never attempted in Congress, according to another person who insisted on anonymity to share her private remarks in caucus.
Other prominent Democrats have started to lend their support to the fledgling deal.
“We know we are close,” said Representative Joyce Beatty, D-Ohio, chair of the Congressional Black Caucus, after a meeting with Biden at the White House. “And let me be explicitly clear: our footprints and our fingerprints are on it.”
From the White House, press secretary Jen Psaki said Biden still hopes to have a deal in hand to show foreign leaders that the US government is acting effectively on climate change and other major issues. But she admitted that might not happen, forcing her to continue working on the package remotely.
She cautioned against failure as opposed to compromise.
“The alternative to what is being negotiated is not the original package,” she said. “It’s nothing.”
Democrats hope to reach a deal by the end of the week, paving the way for a House vote on a $ 1 trillion bipartisan infrastructure bill before routine transportation funds expire Sunday. This separate roads and bridges bill was stalled when progressive lawmakers refused to support it until deliberations on the broader Biden bill were completed.
Associated Press editors Farnoush Amiri, Darlene Superville, and Colleen Long contributed to this report.