Democrats' New Tax Plan Hits Corporations, Wealthy Americans Hardest

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Democrats' New Tax Plan Hits Corporations, Wealthy Americans Hardest
House Democrats propose raising the tax rate for millionaires by 10% and lifting the corporate tax rate for some companies by 4.5%.

House Democrats began the serious work of trying to implement President Joe Biden’s expansive spending plan, but getting there will require remarkable legislative nimbleness, since Biden has said the revenue to pay for it must come only from Americans who earn more than $400,000 a year.

Republicans, who have vowed lockstep opposition to the plan, turned their anger against proposed tax breaks they portrayed as subsidies for wealthy elites rather than help for the poor and middle class. Electric vehicles became a rallying symbol as class-warfare overtones echoed through a committee session.

The Democrats are proposing that the top tax rate rise back to 39.6% on individuals earning more than $400,000 — or $450,000 for couples — in addition to a 3% surtax on wealthier Americans with adjusted income beyond $5 million a year. 

For big business, the proposal would lift the corporate tax rate from 21% to 26.5% on companies’ annual income over $5 million.

“Look, I don’t want to punish anyone’s success, but the wealthy have been getting a free ride at the expense of the middle class for too long,” Biden tweeted Tuesday. “I intend to pass one of the biggest middle class tax cuts ever — paid for by making those at the top pay their fair share.”

 

For middle- and low-income people, tax help, not increase, is on offer as the House Ways and Means Committee digs into debate and drafting of tax proposals to both fund and buttress Biden’s ambitious $3.5 trillion rebuilding plan that includes spending for child care, health care, education and tackling climate change.

The proposals call for $273 billion in tax breaks for renewable energy and “clean” electricity, including $42 billion for electric vehicles and $15 billion for a “green workforce” and environmental items. Increases in the child tax credit to $300 a month per child under 6 and $250 monthly per child 6-17, which came in coronavirus relief legislation earlier this year, would be extended through 2025.

The House tax proposal is pitched as potentially raising some $2.9 trillion — a preliminary estimate — which would go a long way toward paying for the $3.5 trillion legislation. The White House is counting on long-term economic growth from the spending plan to generate an additional $600 billion to make up the difference.

All GOP lawmakers are expected to vote against the overall legislation. But Republicans are largely sidelined as Democrats rely on a budget process that will allow them to approve the proposals on their own — if they can muster their slight majority in Congress.

Additional reporting by the Associated Press.