Key House Democrat skeptical of billionaire tax, calls it 'challenging' to implement
Massachusetts Democrat says House tax-hike bill 'looks better every day'
A top House Democrat threw doubt on a new Senate plan to tax the unrealized capital gains of billionaires and other ultrahigh earners, arguing the proposal may be too complicated to implement.
The proposal, which Senate Finance Chair Ron Wyden, D-Ore., is slated to unveil later this week, would set the so-called billionaires' income tax at $1 billion income, or three consecutive years of $100 million or more in income. Democrats hope to generate at least $200 billion in new revenue over the next decade from the tax, which would include stocks as well as other assets like real estate, bonds and art. Individuals could claim deductions for annual losses in the value of their assets.
But Rep. Richard Neal, the chairman of the tax-writing Ways and Means Committee, said Monday that he told Wyden during a discussion that the administration of the senator's proposed billionaire's tax is "a bit more challenging."
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Neal, D-Mass., suggested the House's tax-increase bill – which reversed the bulk of Republicans' 2017 Tax Cuts and Jobs Act – was more straightforward and easier to adopt.
Under that measure, the top individual income tax rate would rise to 39.6% from 37% for married couples who report taxable income of more than $450,000 and for individuals who report more than $400,000. The corporate tax rate would increase to 26.5% from 21% for businesses earning more than $5 million in income. The bill also included a 3% surcharge on individual income above 5% and increased the top tax rate for capital gains – the proceeds from selling an asset – to 25%, up from 20%.
Although the House proposal was closer in line with President Biden's initial tax strategy to fund his signature economy spending plan, Democrats had to rethink their various revenue raisers after one key Democrat, Sen. Kyrsten Sinema, D-Ariz., objected to higher taxes for well-off corporations and rich Americans. With the slimmest possible Senate majority, Democrats had no votes to spare.
Still, despite Synema's rejections, Neal hinted the House measure was not fully off the table.
"Our plan looks better every day," he told reporters.
With Neal's pushback, it's unclear whether the billionaire tax, which would be the first of its size and scope in an advanced economy, will be backed by every Senate Democrat and nearly every House Democrat — the required threshold for its passage
Democrats say the tax would affect roughly 700 taxpayers, or about 0.0002% of the richest Americans.
"Raising the rate is not going to cause Jeff Bezos to pay a penny more," Sen. Elizabeth Warren, D-Mass., told MSNBC on Sunday. Warren has pushed for a tax on the wealthiest Americans for years, rolling out a far more expansive plan during her 2020 presidential campaign. "What we need is a tax that focuses on the wealth of the richest Americans."
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Critics, including Republicans and tax groups such as the National Taxpayers Union, have slammed a tax on billionaires' unrealized capital gains, arguing it would add more bureaucracy to the already bloated tax system and hurt business investors.
Democratic leaders have set an Oct. 31 deadline to reach an agreement on the spending plan and a separate $1.2 trillion bipartisan infrastructure deal. Although it's unclear what the final tax and spending proposal may look like, it's expected to be significantly smaller than the original one floated by the White House. Biden has discussed a topline figure with Democrats that would be somewhere between $1.7 trillion and $1.9 trillion.
Democrats have just a few legislative weeks to negotiate and pass a spending bill in both chambers in addition to the infrastructure bill that Biden views as critical to his campaign pledge to work across the aisle. But the party will also be juggling the threat of two impending crises: a government shutdown and debt default.
"We need to get this done," Biden said Monday during remarks at a New Jersey transit center.