Democrats are looking into revoking several tax cuts that Republicans enacted during former President Donald Trump’s administration to pave way for most of the $3.5 trillion spending bill that is currently under consideration in Congress.
Richard Neal, D-Mass., House Ways and Means Committee Chairman released information Monday about a plan which includes raising the top corporate tax rate to 26.5% from the current 21% and reinstating the 39.6% top rate for individuals earning more than $400, 000 and marries couples who are earning more than $450, 000.
The changes are part of the balancing act afflicting the efforts of the Democrats to authorize President Biden’s domestic agenda. Leaders are trying to prove to those who don’t believe within their own group that it is possible to finance a wide expansion of federal spending on everything: From housing and health care, financial support for families, and climate change. Everything without raising taxes, NPR reported.
“Our proposals allow us to both address our perilously changing climate and create new, good jobs, all while strengthening the economy and reinvigorating local communities,” Neal said in a statement. “Taken together, these proposals expand opportunity for the American people and support our efforts to build a healthier, more prosperous future for the country.”
Neal together with other leaders is hoping to persuade centrist Democrats in the House and Senate to accept trillions of dollars in new spending given that it doesn’t affect adding to the escalating federal debt and deficit. Democrats have no room for error as they try to pass the spending bill utilizing the special budget rules to avoid a GOP filibuster.
In order to pass the legislation, leaders must need to get everyone, 50 Senate Democrats and virtually all House Democrats to vote for the bill.
Ways and Means Committee Tax writers are suggesting a long list of tax changes that are meant to fit perfectly together to offset most of the spending. The Joint Committee on Taxation, responsible for assessing the revenue impact of tax policies, estimates that the tax changes will raise over $2, 073 trillion. According to democrats, they are expecting long-term economic impacts from this bill and could drive the averaged revenue higher.
Senate Minority Leader Mitch McConnel, R-Ky., thinks that the plan is a “reckless tax-and-spending spree” which will leave Americans deeply involved with the federal government.
Republicans collectively rejected the plan and said they will not work with Democrats to pass a routine increase to the federal debt limit, while the Democrats push for new spending.
The changes range from small items like increasing taxes on nicotine and tobacco products up to major reversals of tax cuts passed by Republicans.
Aside from the rate hikes for corporations and individuals, Democrats want to increase taxes on capital gains and pass taxes for businesses that operate as pass-through units.
