Much of the administration’s proposed spending falls within the purview of other congressional committees – which threatens to leave Neal’s panel with the unpopular job of raising taxes while others focus on the task more enviable to decide how to distribute the goodies.
Neal has his own list of priorities that could end up crowding out some of the administration’s proposals. Among them: making permanent the recent expansion of tax breaks by Democrats for average Americans; revive the Obama-era Build America Bonds program; and the creation of a new payroll tax to subsidize the salaries of daycare workers.
All of this underscores how the Democrats have a lot of differences to work out, and that Biden’s proposal is just the starting point for what will likely be months of negotiations.
A spokesperson for Neal did not respond to requests for comment.
Neal’s committee will be crucial because any tax legislation in Congress is supposed to start with ways and means.
For now, his panel is on hold after Biden’s speech last Wednesday calling for a second big spending package, this one focused on the so-called care economy.
They first wait for the party leaders to decide how to proceed. It’s unclear whether Democrats will pursue a bipartisan plan with Republicans, in which case tax hikes are unlikely to be an option at this time, or whether Democrats intend to go it alone.
Tax writers also need the Treasury Department to publish its “green book,” a dense volume outlining the details of the administration’s tax proposals, including the amount of money they can expect to raise.
Neal has been a notable exception among leading Democrats campaigning for higher taxes on businesses and the wealthy.
While Senate Finance Chairman Ron Wyden (D-Ore.) And his fellow tax drafters have put together a plan to increase taxes on foreign profits of multinational corporations, delving deep into the weeds of obscure issues like a tax called GILTI, Neal was a mom on the subject.
Likewise, he carefully avoided adopting Biden’s list of tax hikes. Last week, as he praised Biden’s “monumental” proposal to expand preschool programs, access to community colleges, and other initiatives, Neal only spoke obliquely about the increases. tax proposed by the administration, in an ephemeral reference to “the correction of our broken tax code”.
While many Democrats want to move quickly to a spending plan, Neal said he’s in no rush to find the funding.
“I am reluctant to adopt a direct revenue stream until we establish the architecture [of the plan]He told CNBC last week. “What we have tried to do is assess the needs, seek testimonials and approach the problem from the side of reality, and then solve the problem of the appetite for the income that will be needed. “
This could in part be strategic, as announcing in advance how lawmakers intend to raise taxes only gives lobbyists more time to rally the opposition. As part of their March stimulus package, when they needed cash to stay within budget, Democrats slipped $ 60 billion in tax increases late in negotiations, in part to thwart lobbyists.
While Biden would ask Neal’s panel to come up with the tax increases, much of his trillions in new spending on everything from highways to help to teachers would be allocated by other committees, which angered the tax panel.
Prior to Biden’s speech, Neal rolled out his own detailed plan that diverges from the administration’s proposal on a number of issues.
It would make the temporary expansion of the child tax credit by Democrats permanent, going so far as to determine the details of what would happen if a separate underlying expansion of the program by Republicans expiring in 2025 was authorized by lawmakers. to expire. Biden didn’t go that far, in part because of the cost.
Neal also wants to create a new tax break aimed at increasing the incomes of daycares and other child care providers by allowing employers to claim a $ 5,000 break, provided they pay workers more than the ladder. Federal GS-3 salary – currently about $ 11.50 per hour.
He wants to extend a provision for the earned income tax credit that will allow people to take the break – which is usually indexed to the amount of their work – even when they lose their jobs.
He ticked off a list of other important priorities for him: reviving federally subsidized Build America bonds to fund capital projects; expanding tax credits for new markets, which encourage investment in low-income areas; and strengthening tax incentives for the construction of affordable housing.
In a statement last week, Neal hinted at how his proposals could potentially exclude other initiatives because of costs.
“The committee will explore how to move forward with a permanent extension of the child tax credit, the earned income tax credit, and the child care and dependent care tax credit, and I think we can do this while investing responsibly in other top priorities, ”he said. .
“Some details may vary between our proposals; However, President Biden and I are united in our common goal of improving the lives of American families.