Skip to content
Biden’s infrastructure plan will bring tax showdown

President Joe Biden proposes a multibillion dollar infrastructure plan it would increase corporate taxes to pay for roads, bridges, and climate change mitigation investments.

The tax provisions of the infrastructure bill will be Democrats’ first large-scale legislative attack on a Republican tax law they have insulted since 2017.

But Biden’s tax proposals unveiled on Wednesday are only a fraction of the various tax hikes Democrats have talked about adding to the infrastructure bill. And there’s even a faction of moderates pushing a tax cut for some wealthy households as part of the package.

In other words, Democrats are going to have a great family conversation about taxes. It might even get ugly.

The White House on Wednesday presented a Made in America tax plan to accompany the first part of the president’s infrastructure proposal, offsetting $ 2 trillion in spending over 15 years. The plan includes a host of corporate tax changes, mostly changing elements of the tax cuts and jobs law that Republicans passed in 2017.

The Biden plan would raise the corporate tax rate from 21% to 28% (still lower than the 35% rate before the GOP tax law), limit some deductions and impose a higher minimum tax on global corporations.

The White House has said it will introduce the second part of Biden’s infrastructure plan, which will focus on child care, family tax credits and other “soft” infrastructure programs, next month, and will likely hit the personal side of 2017. tax law. The president said he would support higher taxes for people who earn more than $ 400,000 a year.

“Anyone who earns more than $ 400,000 will see a slight to a significant increase in taxes,” Biden said in an interview with George Stephanopoulos of ABC News earlier this month. “If you earn less than $ 400,000, you won’t see a single cent of additional federal tax.”

It’s the individual side of the tax code where disagreements await – and with Democrats holding tiny majorities in both the House and Senate, the disagreements could prove to be significant.

The White House reported this week, for example, that Biden doesn’t like Senator Elizabeth Warren’s proposal for a tax on the accumulated wealth of the richest Americans. The Massachusetts Democrat has proposed a 2% annual tax on wealth over $ 50 million and a 3% tax on household equity and trusts over $ 1 billion. The proposal would bring in up to $ 3 trillion over a decade. Even a weaker version could be useful if Democrats are worried about the cost of their infrastructure proposals.

“The ultra-rich and the powerful have rigged the rules so much in their favor that the richest 0.1% pay a lower effective tax rate than the poorest 99%, and the wealth of billionaires is 40%. higher than before the onset of the COVID crisis, ”Warren said. when she unveiled the last version of his proposal earlier this month.

Biden is in favor of lowering the top marginal tax rate to 39.6% from 37% and increasing the capital gains tax rate for people with income over $ 1 million – ideas supported by the Democrats. He also approved a stricter estate tax, which is currently only paid by heirs of the wealthiest 0.1% of estates, and Democrats in Congress recently released similar proposals.

But there will likely be some disagreement over reversing the 2017 tax law’s limitation on household deductions for local and state taxes. A handful of House Democrats even said they will not vote for any changes to the individual side of the tax code unless they recoup the full national and local tax deduction, or SALT, as tax experts call it.

Limiting the deduction was one of the only things in Republican tax law that actually disadvantaged high-income households. Some Democrats have complained that the change has disproportionately affected households in Democratic states such as New York; other Democrats have pointed out that the repeal of the limitation primarily benefits people with incomes over $ 1 million.

“The vast majority of the benefits of repealing the SALT cap would go to high-income Americans,” Senator Michael Bennet (D-Colo.) Told the Senate in 2019. “The repeal would be extremely costly, and for that reason costly , we could advance much more worthy efforts to help working and middle class families across the country.

Biden’s infrastructure plan includes $ 621 billion for roads, highways, bridges and waterways, along with additional investments to electrify vehicles, expand broadband, and make the country’s infrastructure more resilient to the economy. climate change. It would also spend $ 400 billion caring for the elderly and people with disabilities, $ 300 billion on building and renovating homes, and $ 300 billion on innovation and research.

The proposal faces an uncertain path in Congress, however. Biden is unlikely to find GOP endorsement of a multibillion-dollar spending bill funded by tax hikes, even on an issue like infrastructure that typically enjoys broad bipartisan support.

“The $ 3.5 trillion in new taxes proposed to pay off a bag of liberal priorities will not only target the richest, but will hurt American workers who are still trying to make ends meet during this pandemic,” TW said. Arrighi, a spokesperson. for the Republican National Senate Committee. “They are more about boosting the economy of Washington, DC than helping workers and small businesses across the country.”

Democrats can pass the bill unilaterally with a simple majority in the Senate using the same budget reconciliation process that allowed them to pass their coronavirus relief package. But doing it without Republican help will require full party unanimity, a difficult task given razor-thin majorities in both legislative chambers and competing demands from progressives like Rep. Alexandria Ocasio-Cortez (DN. Y.) and conservatives like Senator Joe. Manchin (DW.Va.).

.



Source link