WASHINGTON – The Democrats' idea for a new billionaires' tax to help pay for President Joe Biden's social services and climate change plan quickly ran into criticism as too cumbersome with some lawmakers preferring the original plan of simply raising the top tax rates on corporations and the wealthy.
Biden said Monday he's hopeful the talks with Congress can wrap up overall agreement on the package this week. It's tallying at least $1.75 trillion, and could still be more. Biden said it would be “very, very positive to get it done” before he departs for two overseas global summits.
Resolving the revenue side is key as the Democrats scale back what had been a $3.5 trillion plan, insisting all the new spending will be fully paid for and not pile onto the debt. Biden vows any new taxes would hit only the wealthy, those earning more than $400,000 a year, or $450,000 for couples.
The White House had to rethink its tax strategy after one key Democrat, Sen. Kyrsten Sinema, D-Ariz., objected to her party's initial proposal to raise tax rates on wealthy Americans by undoing the Trump-era tax cuts on those earning beyond $400,000. Sinema also opposed lifting the 21% corporate tax rate. With a 50-50 Senate, Biden has no votes to spare in his party.
Instead, to win over Sinema and others, the White House has been floating a new idea of taxing the assets of billionaires and another that would require corporations to pay a 15% minimum tax, regardless of whether they show any profits. Those both appear to be gaining traction with another pivotal Democrat, Sen. Joe Manchin, D-W.Va., who told reporters he supported new ways to ensure the wealthy to pay their “fair share.”
Democrats on the Senate Finance Committee, led by Sen. Ron Wyden of Oregon, are prepared to roll out the tax revenue plan in a matter of days.
The billionaires' tax is being modeled on a 2019 bill from Wyden to treat assets as income. Under Wyden's emerging plan, the billionaires' tax would hit the wealthiest of Americans, fewer than 1,000 people. It would require those with assets of more than $1 billion, or three-years consecutive income of $100 million, to pay taxes on the gains of stocks and other tradeable assets, rather than waiting until holdings are sold.
Overall, the billionaires' tax rate has not been set, but it is expected to be at least the 20% capital gains rate.
Senate Republican leader Mitch McConnell called it a “hare-brained scheme” and warned of revenue drying up during downturns. Some Republicans indicated such a tax plan could be challenged in court.
But key fellow Democrats are also raising concerns, saying the idea of simply undoing the 2017 tax cuts by hiking top rates was more straightforward and transparent.