House Democrats are seeking to raise $2.9 trillion in tax revenue by repealing some Trump-era tax cuts, raising taxes for large firms and couples earning over $450,000, according to a recently released draft proposal circulating with the House Ways and Means Committee.
The draft tax increases propose a 39.6% top tax rate on Americans who earn over $400,000 or married couples who earn $450,000 jointly. That rate currently sits at 37% after Republicans slashed it.
The “high-earners” tax rate hike matches President Biden’s proposal earlier this year, which started at $400,000 for “families.”
The new proposal, first obtained by Business Insider, outlines that the capital gains tax rate, which had previously been suggested to double, would only be raised to 25%, up from 20%.
The plan also suggests a 3% “surtax” on those with an adjusted gross income of over $5 million and an increase for the corporate tax rate to 26.5%, up from the 21% set in 2017, for businesses earning over $5 million. Businesses that earn less than $400,000 would see their corporate tax rate drop to 18%. Businesses with income that falls in the middle would not see any change.
Combined state and federal tax rates for people making over $5 million under the new proposal could put top earners in New York City at 61.2%, top earners in California at 59.7% and top earners in New Jersey at 57.2%, according to CNBC.
House Democrats are also seeking to raise the tax rate on tobacco products.
Additionally, the proposal includes $80 billion in funding for the IRS over the next 10 years to strengthen “tax enforcement related to high income taxpayers.”
The proposed increases are still subject to change.
House Democrats are looking to use the funds obtained to finance the $3.5 trillion pending package that is facing bipartisan backlash.
Last week, Senate Democrats also assembled a laundry list of possible tax hikes to help finance the proposed $3.5 trillion spending package, according to an internal committee document obtained by The Post.
The Senate plans are nowhere near finalized, but they include and are not limited to raising the top corporate tax rate “from 21 percent to a higher rate,” taxing stock buybacks, reinstating the 39.6 percent top personal income tax rate, taxing capital gains at the top individual tax rate for “high-income taxpayers,” and establishing a minimum corporate tax rate of 15 percent of a corporation’s “book income.”
Sen. Mike Crapo (R-Idaho), ranking Republican member on the Senate Finance Committee, told The Post that he had “serious concerns” about the Democratic “tax-and-spending spree,” adding that the proposals could cause immediate and long-term damage to the US economy.
Despite Democrats’ attempts at coming up with funding for the massive spending bill, they are still battling within their own party for support for the legislation.
Sen. Joe Manchin (D-WV) confirmed again Sunday that he will not vote for the spending plan, prompting Sen. Bernie Sanders (I-Vt.) to rip the decision as “not acceptable.”
Earlier this month, Manchin wrote an op-ed in the Wall Street Journal outlining his opposition, suggesting the price tag be lowered to around $1.5 trillion.
Sen. Kyrsten Sinema (D-Ariz.) has also repeatedly said she will not support an additional $3.5 trillion in spending.
