Senate Democrats on the Finance Committee, are exploring a wide array of Tax Options, outside of just raising the Corporate and Capital Gains Tax Rate, to Pay for their Proposed Spending Package.
Democrats are threading the needle on the Package, which Leadership hopes to clock in at $3.5 Trillion, because of how slim their Majorities are in both the House and the Senate.
Various Funding Mechanisms are being discussed, in order to Appease Members and Pay for the enormous piece of Legislation. The Legislation cannot add more than $1.75 Trillion to the Deficit over 10 years, according to the Language used in the Democratic Budget Reconciliation Instructions, which is the Process that will allow them, to move the Legislation, Bypassing any GOP Filibuster.
They also have been notified, that this is the Last Budge Reconciliation they can use, this Budget Cycle.
While some of the Proposals have been Public for weeks Including: Raising the Corporate Income Tax Rate and Capital Gains Tax Rate, other Policies such as: New Taxes on Stock Buybacks; Executive Compensation; and Carbon Emissions, were Not part of the Plan proposed by the Biden Administration.
One of the Options offered by Senate Finance Chairman, Ron Wyden (D-OR), is a Yearly Tax on the Unrealized Gains of Billionaires, and a Tax on Companies based on the Company’s Ratio of Executive Pay to the Average Pay of Employees.
Some of the Proposals Target the Environment: Oil and Gas Companies face the Loss of Tax Breaks, and a 20-cent per-pound Tax on Virgin Plastics was suggested. Virgin Plastic is Plastic that is produced from Oil, as Opposed, to Previously Used and Recycled Material.
The Finance Committee is also looking to Crack Down on ways that People avoid Paying Estate Taxes, such as: Grantor-Retained Annuity Trusts, and Intentionally Defective Grantor Trusts.
Another idea is to introduce an Excise Tax on Stock Buybacks, and Curtail Corporate Deductions for Executive Pay.
Biden had previously Proposed Hiking the Corporate Tax Rate by 7 Percentage Points, from 21% to 28%. The Rate was previously Lowered from 35% as part of Trump’s 2017 Tax Cuts and Jobs Act.
The initial Biden Tax Plan also called for Raising the Top Individual Income Rate to 39.6% and Taxing Capital Gains for Households making more than $1 Million as Ordinary Income. People making in Excess of $1 Million could face a Federal Tax Rate of up to 43.4% when an Existing Obamacare Surtax on Investment Income, is added on.
The Capital Gains Hike is Tricky because some Centrists might Express Aversion, so the New Proposal floating around the Finance Committee Increases the $1 Million Exemption to $5 Million per Person or $10 Million per Couple.
Democrats are also facing Internal Disagreement on a Stepped-Up Basis, which allows Inherited Assets to be Taxed at the Appreciated Value of when they were Inherited, as Opposed to the Basis Value of when they were First Bought. Max Baucus, a Montana Democrat, who Served as the Chairman of the Senate Finance Committee, pushed Back on the Notion in an Opinion Piece, this week.
Further adding to Democrats’ Difficulty in Coalescing the Package is that a Key Vote, Sen. Joe Manchin (D-WV), urged his Party to “hit a strategic pause” on the Legislation, citing Inflation and the Burgeoning National Debt.
“While some have suggested this reconciliation legislation must be passed now, I believe that making budgetary decisions under artificial political deadlines never leads to good policy or sound decisions,” Manchin wrote in an Op-Ed for the Wall Street Journal. “I have always said if I can’t explain it, I can’t vote for it, and I can’t explain why my Democratic colleagues are rushing to spend $3.5 trillion.”
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