WASHINGTON (AP) — 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.
For couples with incomes greater than $400,000, the top tax rate would go back to 39.6%. Wealthier Americans would pay 3% tax if they make more than $5 million per year. The proposal would raise the 21% corporate rate to 26.5% for incomes above $5 million.
All in all, the tax increases are in line Biden’s original proposals. This would bring about the most significant changes to the tax code since Republicans with former President Donald Trump reduced taxes in 2017. Both business and anti-tax organizations will object. Democrats are moving forward.
Representative Richard Neal (D-Mass.), the chairman of the tax-writing Ways & Means Committee said that the proposals combined would “expand opportunities for the American people” and “support our efforts to build a better, healthier, and more prosperous future.”
Biden and his colleagues in Congress face a daunting task as they attempt to put together the enormous package that will be the most comprehensive in a long time. President Biden’s “build back” agenda includes spending on education, child care, and health, as well as strategies to combat climate change. This is part of the Great Society or New Deal. It is a huge undertaking.
To win his support, a key Democratic senator says that the bill’s cost must be reduced from $1 trillion to $1.5 billion.
Sen. Joe Manchin (D-W.Va.) also warned that Congress could not meet the September goal set by Nancy Pelosi, D.Calif. for passage due to his wide disagreements with liberal Democrats about how much and how to fund it.
Manchin, D-W.Va., said Sunday that $3.5 trillion was too much for him. He specifically opposed a proposed 21% increase in corporate tax rates to 28% and huge new social spending. We should be looking at all things, but we aren’t. We don’t need to rush to get this done in one week, because we have a deadline or someone will fall through the cracks.
If Democrats want to pass Biden’s “Build Back better” massive agenda, they have no votes left. The Senate is split 50-50 with Vice President Kamala Harris acting as the tiebreaker. The deadline for the committees to draft the bill has been set by Democratic congressional leaders at Wednesday.
Manchin, when asked repeatedly about a price tag that he could support, said: “It’s going be $1, $1.5 trillion.” The range was calculated on a modest increase in corporate tax to 25%. He believes this will help keep the U.S. competitive worldwide.
“Is the range they’re willing to pay for and what tax changes they want, that is competitive?” Manchin asked. Manchin replied, “I believe there are some changes that do not keep us competitive.”
However, Sen. Bernie Sanders of Vermont, an independent senator, who chairs the Senate Budget Committee, said that he and other members from the liberal flank in Congress had originally advocated a $6 trillion package.
Sanders stated that he did not believe the package was acceptable to President Obama, the American people or the overwhelming majority of Democratic caucus members. He stated that he believed we would all come together to create a $3.5 billion reconciliation bill, which addresses the unmet needs of working families.
The current blueprint proposes billions of dollars for infrastructure rebuilding, combating climate change, expanding or introducing services such as free prekindergarten and dental, vision, hearing aid, care for older adults.
Although Manchin approved a budget resolution setting the amount, he and Senator Kyrsten Sinema (D-Ariz.) expressed reservations about the total figure. All of it would come out of taxes on the wealthy and corporations.
The Congressional committees have been hard at work this month on portions of the 10-year proposal to meet the timeline set by Pelosi and Senate Majority leader Chuck Schumer, D.N.Y. to draft the bill. Pelosi wants a House vote on Oct. 1 to meet the Sept. 27 deadline for voting on an infrastructure plan that is slimmer and more popular with moderate lawmakers.
In an earlier op-ed, Manchin argued for a “strategic freeze” on the legislation in order to reconsider the cost. He called on Congress to take action first on the $1 trillion bipartisan Infrastructure bill, which was passed by the Senate. Liberal Democrats, however, have threatened to withhold their support unless the $3.5 trillion spending bill alongside it is passed.
Manchin spoke on CNN’s State of the Union, NBC’s Meet the Press and ABC’s This Week. Sanders was interviewed by ABC and CNN.
Associated Press writer Marcy Gordon contributed to this report.