Senate MPs draw up wishlist for tax hikes to fund $ 3.5 billion spending windfall
Senate Democrats have put together a comprehensive list of possible tax hikes to help fund their $ 3.5 trillion spending, according to an internal committee document obtained by The Post.
Many Democrats are eager to implement the multitude of tax hikes for businesses and individuals to fund the $ 3.5 trillion plan, but Beltway insiders doubt the more controversial plans – like taxing people share buybacks and large executive payments – will form the final bill.
The plans are still in their infancy, still being worked out by Democratic lawmakers, but they include:
- Increase the corporate tax rate “from 21% to a higher rate”. The document does not list a specific rate, but President Joe Biden has previously called for a 28% corporate tax increase.
- Taxing share buybacks, one of Massachusetts Democratic Senator Elizabeth Warren’s favorite projects. When a company repurchases its shares, it often increases the share price because it withdraws the shares from circulation. The proposal could apply an “excise tax” to companies that buy back a significant amount of shares. Alternatively, buybacks could be treated as some type of dividend to shareholders, according to the document.
- Impose an excise tax on “CEO pay gap” on companies whose CEOs earn more than a certain percentage of the worker’s average salary.
- Restore the top personal income tax rate of 39.6% to replace the current 37% rate.
- Taxation of capital gains at the highest individual tax rate for “high income taxpayers”, which the document defines as people in the top tax bracket.
- Establish a minimum corporate tax rate of 15% of a corporation’s âbook incomeâ, even after including certain deductions.
The tax hikes on the table would fund the $ 3.5 trillion plan, which would include a universal preschool, expanded Medicare benefits, a free community college and what Democrats say are measures to fight the climate change.
Senator Mike Crapo, a Republican from Idaho, said in a statement to the Post that he had “serious concerns” about the Democratic “tax and spending frenzy”. He said the proposals could cause immediate and long-term damage to the US economy. Crapo is the top Republican member of the Senate finance committee.
Top Democrats on the Senate Finance Committee, including Oregon President Ron Wyden, did not immediately respond to the Post’s request for comment.
President Joe Biden had promised not to raise taxes on households earning less than $ 400,000 a year. It is not clear whether these proposals would affect people earning less than this threshold.
The House, led by Majority Leader Nancy Pelosi of California, passed the first framework of the $ 3.5 trillion spending bill last month.
Meanwhile, Warren has repeatedly called for taxes that will ensure the wealthiest “pay their fair share of taxes.”
Other individual tax increases focus on taxing billionaires – and forcing them to pay taxes every year on their assets. According to the document, this “would apply to around 600 people and would raise hundreds of billions.” Democrats are also considering taxing mega retirement accounts, estates, net investment income, derivatives, and deferred interest.
Other proposals include increasing funding for the Internal Revenue Service so it can better collect taxes, as well as a tax on fossil fuels, carbon and plastics.
For now, DC insiders remain skeptical about how many proposals will appear in the final bill. “It’s just a long list of proposals without a price tag,” says James Lucier, managing director of Capital Alpha, a Washington-based policy research organization. âIt hardly seems like a definite plan to do anything. “
According to the note, Democrats are considering a range of options to help pay for the massive spending proposal. Getting the whole Democratic caucus involved will prove to be a challenge.
Democrats are already struggling to unify moderate members like Senator Joe Manchin of West Virginia, who on Thursday suggested taking a break on the massive spending bill.
Democrats aim to raise $ 3.5 trillion over 10 years, sources with knowledge of the process told The Post. But they are more likely to only receive approval for around $ 1.5 trillion in tax increases.
“They will not have a consensus in the Democratic caucus to get all tax proposals approved and in final legislation,” Charles Myers, chairman of consulting firm Signum Global Capital, told The Post. âSo I would consider this all to be the initial wish list that will ultimately be reduced. “