The House Democrat-led Ways and Means Committee has introduced legislation it expects to help pay for the president’s mammoth $3.5 billion budget plan.
The 881-page bill proposes a number of tax increases on corporations and wealthy individuals, including a new corporate tax rate of 26.5 percent (up from the present rate of 21 percent), a 5 percent bump in the capital gains tax (to 25 percent), and a new 3 percent surcharge on the incomes of individuals who make over $5 million a year.
The bill does not specify how much money the tax increases will pay for. Less than one percent of Americans earn more than $5 million. Even at its proposed higher percentage, the corporate tax rate is still well below the 45 percent+ it was at before Reaganomics in the 1980s and the Trump tax cuts. The capital gains tax rate, meanwhile, has historically fluctuated between 15 and 40 percent for much of the past 70 years or so, and failed to prevent US federal debt from snowballing.
In addition to tax increases, the Ways and Means Committee’s bill also includes tax cuts – in areas including child care, health care and renewable energy, with tweaks to the bill expected to continue to be made into Tuesday or Wednesday.
In a press statement Monday, committee chairman Richard Neal announced that the new tax proposals “allow us to both address our perilously changing climate and create new, good jobs, all while strengthening the economy and reinvigorating local communities. We seek to help families better afford essentials with the continuation of the expanded Child Tax Credit and investments that will lower the cost of prescriptions and health insurance premiums. And we can do all this while responsibly funding our plans”.
Democrats enjoy a narrow eight-seat majority in the House of Representatives, holding 220 of the chamber’s 435 seats while Republicans hold 212.
In the Senate, the Democrats have 48 of the chamber’s 100 seats, and can usually count on the support of Bernie Sanders of Vermont and Angus King of Maine, two independents who caucus with the liberal party. Republicans control 50 seats.
The deadlock in the Senate, which can theoretically be broken by the vice president for a 51 vote majority, means every single Democratic lawmaker, plus the independents, and possible a Republican or two are required for major legislation to be passed. Republicans have already poured cold water on Biden’s budget bill, with many lawmakers indicating that they will not vote for it in its present form.
On Sunday, rogue West Virginia Democratic Senator Joe Manchin announced that he too would not support the $3.5 trillion budget bill unless spending is slashed by more than half.
“We’ve already put out $5.4 trillion and we’ve tried to help Americans in every way we possible can and a lot of the help that we’ve put out there is still there and it’s going to run clear until next year, 2022, so what’s the urgency?” Manchin, who regularly votes against his own party’s legislation, said on the Sunday talk show circuit.
The $3.5 trillion in proposed spending would be spread out over the next decade, and include $726 billion for education and primary care, $332 billion for housing affordability and rental assistance, $67 billion for solar technologies, clean water, climate research, and other goodies, plus tens of billions more for an expansion of Medicare, homeland security, investments in Native communities, small businesses and Veterans Affairs facilities.
US federal debt is approaching $29 trillion, and surpassed the 100 percent of GDP mark in the spring of 2020, even before Washington began flooding trillions of dollars into the economy amid the coronavirus crisis.