President Joe Biden’s tax agenda, crafted by experts who worked on the proposals for years and wrote books about their ideas, is getting a wholesale revamp as Democrats battle to find a program their caucus can unite behind.
Amid diplomatic -- at least in public -- bickering among the chairs of the House and Senate’s top tax-writing committees and other stakeholders, the two main takeaways as of Wednesday evening were: the bulk of former President Donald Trump’s 2017 tax cuts will be left in place, while corporations will face a new minimum levy.
It’s far from clear what measures will make the final cut as lawmakers negotiate over the revenue-raisers to pay for what could be a $2 trillion social-spending bill. Biden is set Thursday to announce an agreement on a framework of tax and spending proposals that he’s optimistic Congress can pass, a person familiar with the matter said. But it’s unclear how far-reaching the accord will be and what issues remain unresolved.
Wednesday began with details of a Senate plan for a new billionaires’ tax and Majority Leader Chuck Schumer announcing his hope for a framework deal by day’s end. By evening, the House had rejected that billionaire levy and Senate Budget Committee Chair Bernie Sanders said “it’s not conceivable” for an agreement that night.
Comments from lawmakers indicate that some of Biden’s core proposals -- including increasing the corporate income tax rate, the top marginal income tax rate and the capital gains rate -- are likely out, while other, more creative ideas, --like a minimum tax on the profits on corporate financial statements and a surtax on millionaires -- were still in the running.
Senator Kyrsten Sinema of Arizona, a crucial swing vote for Democrats, has given the Biden administration a list of specific tax policies she will support in order to raise revenue for the social spending plan, people familiar with the matter said Wednesday night.
She would back the billionaires’ tax put forth by Senate Finance Committee Chairman Ron Wyden or a 3% income surcharge for earners above $5 million, as well as a 15% corporate minimum tax, the people said on condition of anonymity to discuss sensitive negotiations.
Some Democrats are frustrated their once-in-who-knows-how-long chance to make the tax code more progressive will, at best, be incomplete. What was originally envisioned -- and could still result -- was the first major comprehensive package of tax increases since 1993, the first year of the Clinton administration. With razor thin majorities in the House and Senate, there’s no telling whether Democrats will be able to come back for more after the 2022 midterm elections.
“It seems to be almost every sensible progressive revenue option that the president wants, that the American people want, that I want seems to be sabotaged,” said Sanders, a Vermont independent who caucuses with the Democrats.
The last-minute rewrite of the tax plan is the result of Democrats scrounging for tax options to appeal to two holdout Democrats, Sinema and Senators Joe Manchin of West Virginia. Sinema’s opposition to tax-rate increases and Manchin’s resistance toward a plan to require banks to report more tax data to the Internal Revenue Service may mean that Democrats will have throw out some of Biden’s ideas that raise the most tax revenue.