House Democrats unveiled a sweeping proposal Monday for tax hikes on big corporations and the wealthy to fund President Joe Biden’s $3.5 trillion rebuilding plan, as Congress speeds ahead to shape the far-reaching package that touches almost all aspects of domestic life.
The proposed top tax rate would revert to 39.6% on couples earning more than $400,000, and there would be a 3% tax on wealthier Americans making beyond $5 million a year. For big businesses, the proposal would lift the 21% corporate tax rate to 26.5% on incomes beyond $5 million.
In all, the tax hikes are in line with Biden’s own proposals and would bring about the most substantive changes in the tax code since Republicans with then-President Donald Trump slashed taxes in 2017. Business and anti-tax groups are sure to object. But Democrats are pressing forward.
It’s a daunting moment for Biden and his allies in Congress as they assemble the massive package that is destined to become one of the largest singles measures considered in some time, if ever. The president’s “build back” agenda includes spending on child care, health care, education and strategies to confront climate change.
One Democratic senator vital to the bill’s fate says the cost will need to be slashed to $1 trillion to $1.5 trillion to win his support.
Sen. Joe Manchin, D-W.Va., also cautioned there was “no way” Congress will meet the late September goal from House Speaker Nancy Pelosi, D-Calif., for passage given his current wide differences with liberal Democrats on how much to spend and how to pay for it.
“I cannot support $3.5 trillion,” Manchin said Sunday, citing in particular his opposition to a proposed increase in the corporate tax rate from 21% to 28% and vast new social spending. “We should be looking at everything, and we’re not. We don’t have the need to rush into this and get it done within one week because there’s some deadline we’re meeting, or someone’s going to fall through the cracks.”
Democrats have no votes to spare if they want to enact Biden’s massive “Build Back Better” agenda, with the Senate split 50-50 and Vice President Kamala Harris the tiebreaker if there is no Republican support. Democratic congressional leaders have set a target of Wednesday for committees to have the bill drafted.
Pressed repeatedly about a price tag he could support, Manchin said, “It’s going to be $1, $1.5 (trillion).” He suggested the range was based on a modest rise in the corporate tax rate to 25%, a figure he believes will keep the U.S. globally competitive.
“The numbers that they’re wanting to pay for and the tax changes they want to make, is that competitive?” Manchin asked. “I believe there’s some changes made that does not keep us competitive.”
The current blueprint proposes billions for rebuilding infrastructure, tackling climate change and expanding or introducing a range of services, from free prekindergarten to dental, vision and hearing aid care for older people.
Manchin voted last month to approve a budget resolution that set the figure, though he and Sen. Kyrsten Sinema, D-Ariz., have expressed reservations about the topline amount. All of it would be paid for with taxes on corporations and the wealthy.
Congressional committees have been working hard this month on slices of the 10-year proposal in a bid to meet this week’s timeline from Pelosi and Senate Majority Leader Chuck Schumer, D-N.Y., to have the bill drafted. Pelosi is seeking a House vote by Oct. 1, near the Sept. 27 timeline for voting on a slimmer infrastructure plan favored by moderate lawmakers.