WASHINGTON, (AP) — President Joe Biden offers a simple message to Democrats about his plan for raising taxes to remake large swathes American’s economy: Focus beyond the bottom line.
Biden wants Democrats to accept a stronger argument: that the plan is fair and that it raises taxes on the wealthy and that it spends more money on programs that target children and the middle classes.
President Obama has proposed revenue increases of more than $3 trillion. This is primarily through increased taxes for corporations and country’s wealthiest households, as well as tighter IRS enforcement against the wealthy. As congressional committees reviewed the measures, key lawmakers expressed doubts about their potential economic impact. A wide range of business groups scrutinized the details and highlighted what they opposed.
Three administration officials interviewed by the White House suggested that they are comfortable with accepting a lower price as part of the negotiation process as long as it produces a fair tax system. These officials spoke under anonymity because they were not allowed to discuss ongoing negotiations.
It is possible to recall the appeal to voters strategy that Biden used to secure a bipartisan infrastructure agreement earlier in the year.
“This is commonsense and people agree with it,” said Kate Berner (White House deputy communications director). “They don’t understand how companies can hold profits overseas and pay no taxes. They don’t understand why a hedge funds manager pays a lower rate of tax than a pipefitter. It is something people consider fundamentally broken.
The administration has remained silent about the low-ball bids Biden would accept to reduce the package, which is a sign of uncertainty. The White House believes that interest groups deliberately misrepresent its tax plans to undermine support. Officials contend that claims of job loss by the U.S. Chamber of Commerce or other groups are exaggerated. They fail to take into account investments in family leave and children, child care, and the environment that they believe will benefit the economy.
In his budget proposal, the president laid out his tax plans. This set a baseline for congressional commissions. Some Democratic lawmakers, including West Virginia Senator Joe Manchin have raised concerns about the spending and tax increases. Manchin raised concerns early on about Biden’s proposal to raise the corporate income tax rate, from 21% to 28 percent.
He stated, “If you want to be a leader in this world and the superpower, you need to have a competitive rate of tax,”
Both Sen. Kyrsten Silena (D-Ariz.) and Senator Manchin voted for the budget blueprint which allowed Democrats to start crafting the social program package. However, they have made it clear that they won’t support the $3.5 trillion topline spending figure over 10 years.
Manchin stated in The Wall Street Journal that “Establishing an artificial $3.5 trillion spending figure and then reverse-engineering partisan social priorities to be funded isn’t how you make policy.”
Democrats can still lose only three votes on the House side and pass the spending bill even if it is unanimously opposed by the GOP, as expected. Already there are signs of unrest. Rep. Stephanie Murphy (D-Fla.) voted against two sections in her party’s bill at a hearing last week and Rep. Ron Kind (D-Wis.) joined her in voting no on the other.
Murphy complained, “I don’t know how much we’re spending, how many we’re raising, how our spending some of that money, and how we’re raising any money.”
Biden’s original proposal for corporate tax reforms would generate approximately $2 trillion over a decade. About 70% of that amount would come from raising the corporate rate to 28% and revising a global minimal tax on profits. Additional $755 billion would be generated by higher individual taxes for the richest Americans, which include an increase in the rate charged on profits of the sale capital assets like stocks and real estate.
An increase in enforcement by IRS would bring about $460 billion. A Treasury Department analysis shows that this figure would rise to $1.6 trillion over the next decade if more IRS employees are fully trained. This is one of the main arguments for saying that the budget will be fiscally responsible.
Democrats have to confront the fact that voters still remember the backlash against tax increases in 1984, which was almost four decades ago.
Many Democrats who are older and from conservative regions fear that voters might penalize them if taxes rise too high, even though Biden and advocacy organizations argue that voters now reject Reagan-ism and will reward Democrats who raise taxes on the wealthy.
Frank Clemente (executive director of Americans for Tax Fairness) stated that “We are in a generational struggle within Democratic Party.” “We are now in a very new era and these Democrats still haven’t caught up to the era in which we’re at.”
Americans for Tax Fairness is one of the groups trying to convince Democratic lawmakers to support Biden’s tax proposals. They have conducted a national and six battleground polls, and mobilized 97 national and 620 state groups to support the plans on the assumption that they are popular.
Even though business groups may not agree with certain aspects of the plan’s contents, they can have different objections depending on their industry. The Chamber of Commerce has voiced its opposition to higher rates for corporations as well as capital gains. On Tuesday, the American Bankers Association wrote to legislators to express concerns about the IRS’s increased reporting requirements on customer accounts.
The Retail Industry Leaders Association (which includes Target, Best Buy, and other major retailers) urged Congress leaders to not raise corporate tax rates but to increase IRS enforcement and ensure all companies pay at minimum a minimum tax before any increase in the corporate rate is considered.
Melissa Murdock, vice president of the trade association, stated that “We are holding a lot more meetings to educate members on this topic and making sure they understand the impact of a rate hike on retail and the importance ensuring all profitable businesses contribute.”
The American Petroleum Institute, which is the largest trade organization representing the U.S. petroleum industry, is trying to block a proposed fee for methane emissions. This would allow supporters to argue that it would slow climate change, improve air quality, and reduce the impact of oil and gas facilities on communities.
The group is running an ad campaign of $1 million or more that says that Washington wants to chart a “extreme course” when it comes energy. It could make energy more costly and less reliable.
Vermont independent senator Bernie Sanders spoke out in support of the full-court press to repeal or reduce tax increases.
Sanders stated that “all of the big money interests in the country are fighting us every day.” “At the end, I believe that what we are trying do is restore the faith in the American people that their government can work to their benefit, not just for the lobbyists on Capitol Hill and the big money interests. We are going to win.”
Even though trade groups are focusing on specific details of complex budgets, the main problem is the proposal to fund $3.5 Trillion more spending over the next 10 years. Neil Bradley, Chamber of Commerce’s executive vice president, chief policy officer and chief political officer, stated that while the tax increases proposed are unheard of, they are inadequate to cover all programs while still complying with Senate budgeting rules.
Bradley stated that he has been doing this for 25-years. “Based upon that experience, I believe that a package this large collapses under its own weight.”