As the Democrats work to save Biden’s spending plan, wealth tax is on the table

A new tax on the wealth of American billionaires is an alternative to raising the income tax rate to fund Joe Biden’s spending agenda, as the White House and the top Democrats are eager to reformulate their tax plans.

The final effort to reach a compromise on tax issues is part of a broader effort by Biden and congressional leaders to reach an agreement on the presidential bill to support economic growth. U.S. economy Before he travels to Rome for the G20 next week.

Legislators and government officials have been painstakingly trying to reduce the size of the US$3.5 trillion climate and social safety net proposal to about US$2 trillion to appease moderate opponents in the party.

Their plan to increase income tax rates on corporate and personal income and capital gains has also been disrupted by the deep-rooted resistance of the US government. Kirsten Cinema, A senator from Arizona.

This forced them to consider a series of new measures, including taxing the wealth of 600 to 700 billionaires, and imposing a minimum domestic tax on companies to ensure that they would not benefit from excessive tax breaks and loopholes.

“I think it’s obvious that most Democrats, progressives, and the leadership want to do a lot more than they voted for, and this puts them in a difficult position,” SEC analyst Donald Schneider Say. Cornerstone Macro and former Republican congressional assistant.

Biden had planned to fund his flagship economic legislation by raising the US corporate tax rate from 21% to 28%, which to some extent reversed a key element of Donald Trump’s 2017 tax cuts.

House Democrats have suggested Limit increase It fell to 26.5% in September, and after a compromise with Senate Democrats, this number seems destined to fall further to 25%. The corporate tax rate may not be raised now, or the tax rate may not be raised, which shocked progressive Democrats.

“There is no partial rollback every year [Trump tax cuts] Make it more difficult to cut. Josh Bivens, research director of the Economic Policy Institute, said this is a bad piece of legislation that has brought tax benefits to shareholders of companies that have flourished in recent decades. “So in this sense, it’s all very frustrating.”

Business groups once led opposition to Biden’s plan to increase corporate taxes, believing that this would hinder corporate investment and reduce America’s competitiveness.

The U.S. Chamber of Commerce calculated that this increase would affect 1.4 million businesses with fewer than 500 employees and provided members of Congress with a list of how many small companies in the state would be affected. But the American business community has yet to declare victory in this struggle.

However, Richard Neal, a Massachusetts Democrat who is chairman of the tax planning committee, has yet to admit defeat on the issue of tax rates, so another turning point may occur.

“The chairman continues to support the Ways and Means product, insists that the plan will be paid in full, and believes that we can still increase the company’s interest rate and reach an agreement on the overall plan,” an assistant to the Ways and Means committee told the committee’s Financial Times.

For the business community, alternatives can be equally unpleasant.

Biden and the Democrats are considering levying a surcharge on stock repurchase – and a minimum tax of 15% on the income of large companies as an alternative, which will offset the benefits of many of their tax deductions. They also proposed limiting the Trump era’s tax deductions for so-called “pass-through” companies-usually small companies whose income is “passed on” to their owners for personal income tax purposes.

Garrett Watson, a senior policy analyst at the Tax Foundation think tank, said: “We calculated that a rise in corporate tax would generate $700 billion, so this is a big gap.” “The Democrats may want to pass more complicated Measures to fill this gap, such as imposing a minimum tax on book revenue. But if they do, they may undermine other parts of the tax law that are designed to incentivize R&D or business investment.”

On the personal side, negotiations are constantly changing. Biden plans to increase the top tax rate for the wealthy from 37% to 39.6%, and increase the tax rate on capital gains and dividends, but these are now problems.

On the contrary, Ron Wyden, chairman of the Senate Finance Committee, is pushing for a tax on billionaire’s wealth — echoing the long-term proposal of progressives such as Senator Elizabeth Warren of Massachusetts. Although some Democrats are satisfied with this solution, others are cautious, saying that it is difficult to make such a big change in tax policy at the finish line in a short period of time.

Democrats feel more and more pressure to end them Internal dispute Considering that more and more people worry that the extended negotiations are hurting Biden’s approval rate and seek compromises to advance the package.

“This hurts Biden. This is hurting the Democrats. Senator Jeff Merkley, Democrat of Oregon, told NBC on Thursday that this is undermining our vision of all that we will achieve because it is very important. “It must end. . I don’t know if soap opera or nightmare soap opera is the correct wording, but we are now in big trouble and there is nowhere to go for such extended negotiations. “

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