Billionaire Tax Hits Critics 10/26 06:07
The Democrats' idea for a new billionaires' tax to help pay for President
Joe Biden's social services and climate change plan quickly ran into criticism
as too cumbersome with some lawmakers preferring the original plan of simply
raising the top tax rates on corporations and the wealthy.
WASHINGTON (AP) -- The Democrats' idea for a new billionaires' tax to help
pay for President Joe Biden's social services and climate change plan quickly
ran into criticism as too cumbersome with some lawmakers preferring the
original plan of simply raising the top tax rates on corporations and the
Biden said Monday he's hopeful the talks with Congress can wrap up overall
agreement on the package this week. It's tallying at least $1.75 trillion, and
could still be more. Biden said it would be "very, very positive to get it
done" before he departs for two overseas global summits.
"That's my hope," the president said before leaving his home state of
Delaware for a trip to New Jersey to highlight the child care proposals in the
package and a related infrastructure measure. "With the grace of God and the
goodwill of the neighbors."
Resolving the revenue side is key as the Democrats scale back what had been
a $3.5 trillion plan, insisting all the new spending will be fully paid for and
not pile onto the debt. Biden vows any new taxes would hit only the wealthy,
those earning more than $400,000 a year, or $450,000 for couples.
The White House had to rethink its tax strategy after one key Democrat, Sen.
Kyrsten Sinema, D-Ariz., objected to her party's initial proposal to raise tax
rates on wealthy Americans by undoing the Trump-era tax cuts on those earning
beyond $400,000. Sinema also opposed lifting the 21% corporate tax rate. With a
50-50 Senate, Biden has no votes to spare in his party.
Instead, to win over Sinema and others, the White House has been floating a
new idea of taxing the assets of billionaires and another that would require
corporations to pay a 15% minimum tax, regardless of if they show any profits.
Those both appear to be gaining traction with another pivotal Democrat, Sen.
Joe Manchin, D-W.Va., who told reporters he supported new ways to ensure the
wealthy to pay their "fair share."
Democrats on the Senate Finance Committee, led by Sen. Ron Wyden of Oregon,
are prepared to roll out the tax revenue plan in a matter of days. It is likely
to include other revenue-raising tax measures, including a plan to beef up the
IRS to go after tax scofflaws.
"Here's the heart of it: Americans read over the last few months that
billionaires were paying little or no taxes for years on end," Wyden said at
The billionaires' tax is being modeled on a 2019 bill from Wyden to treat
assets as income. Another idea, up to a 3% ultra-rich surtax, has been proposed
by Sen. Elizabeth Warren, D-Mass.
Under Wyden's emerging plan, the billionaires' tax would hit the wealthiest
of Americans, fewer than 1,000 people. It would require those with assets of
more than $1 billion, or three-years consecutive income of $100 million, to pay
taxes on the gains of stocks and other tradeable assets, rather than waiting
until holdings are sold.
A similar billionaire's tax would be applied to non-tradeable assets,
including real estate, but it would be deferred with the tax not assessed until
the asset was sold.
Overall, the billionaires' tax rate has not been set, but it is expected to
be at least the 20% capital gains rate. Democrats have said it could raise $200
billion in revenue that could help fund Biden's package over 10 years.
Senate Republican leader Mitch McConnell called it a "hare-brained scheme"
and warned of revenue drying up during downturns. Some Republicans indicated
such a tax plan could be challenged in court.
But key fellow Democrats are also raising concerns, saying the idea of
simply undoing the 2017 tax cuts by hiking top rates was more straightforward
Under the House's bill from the Ways and Means Committee, the top individual
income tax rate would rise from 37% to 39.6%, on those earning more than
$400,000, or $450,000 for couples. The corporate rate would increase from 21%
to 26.5%. The bill also proposed a 3% surtax on wealthier Americans with
adjusted income beyond $5 million a year.
The panel's chairman, Rep. Richard Neal, D-Mass., said he told Wyden in a
discussion Monday that the implementation of the senator's proposed
billionaire's plan is "a bit more challenging."
Neal suggested that the House's proposal was off the table despite Sinema's
objections. In fact, he said, "our plan looks better every day."
Once Democrats agree to the tax proposals, they can assess how much is
funding available for Biden's overall package to expand health care, child care
and other climate change programs.
Democrats were hoping Biden could cite major accomplishments to world
leaders later this week. They are also facing an Oct. 31 deadline to pass a
related $1 trillion bipartisan infrastructure package of roads, broadband and
other public works before routine federal transportation funds expire.
"We need to get this done," Biden said in remarks at a New Jersey transit
After months of start-and-stop negotiations, Biden's overall package is now
being eyed as at least $1.75 trillion. But it could still climb considerably
higher, according to a second person who insisted on anonymity to discuss the
Biden huddled with the conservative West Virginia Democrat Manchin and
Senate Majority Leader Chuck Schumer at the president's Delaware home on Sunday
as they work on resolving the disputes between centrists and progressives that
have stalled the bill.
Disputes remain over far-reaching investments, including plans to expand
Medicare coverage with dental, vision and hearing aid benefits for seniors;
child care assistance; free pre-kindergarten; and a new program of four-weeks
paid family leave.
House Speaker Nancy Pelosi said expected an agreement by week's end, paving
the way for a House vote on the $1 trillion bipartisan infrastructure bill. The
Senate had approved that over the summer, but the measure stalled during
deliberations on the broader Biden bill.
But Rep. Pramila Jayapal, D-Wash., the chair of the Congressional
Progressive Caucus whose support will be crucial for both bills, said lawmakers
want more than just a framework for Biden's plan before they give their votes
for the smaller infrastructure package.
"We want the whole bill," Jayapal told The Associated Press. "We want to
vote on both bills at the same time."