Date: 2024-12-21 Page is: DBtxt003.php txt00021165
Washington Politics
Biden's Legislative Agenda
White House considers new taxes on billionaires, stock buybacks as higher corporate rate appears to fall out of economic package
President Biden laid out next steps in the vaccination effort as employer mandates and booster shots support a fading campaign to get more people inoculated. (Al Drago/Bloomberg News)
Original article: https://www.washingtonpost.com/us-policy/2021/10/20/white-house-tax-plan
Burgess COMMENTARY
Peter Burgess
President Biden laid out next steps in the vaccination effort as employer mandates and booster shots support a fading campaign to get more people inoculated. (Al Drago/Bloomberg News)
By Tony Romm and Jeff Stein
Yesterday at 3:54 p.m. EDT|Updated yesterday at 8:09 p.m. EDT
Senior Biden officials briefed top Democratic lawmakers on a potential shift in the party’s tax plans on a private call Wednesday, as the White House searches for unity on how to pay for its multi-trillion-dollar economic package, according to three people with knowledge of the call, who spoke on the condition of anonymity to describe the private conversation.
While the Biden administration initially proposed increasing the corporate tax rate to 28 percent, a move that would partially unwind the tax cuts under former president Donald Trump, the president’s aides on Wednesday instead discussed an alternative range of tax hikes, likely excluding a corporate tax rate hike as part of a new source of revenue for the package, the people said.
Instead, Biden’s advisers said that they are pursuing a range of ideas that could still raise substantial sums of money from corporations and the rich, including a tax on billionaires’ assets that would resemble a more modest version of the wealth tax championed by Sen. Elizabeth Warren (D-Mass.).
House Democrats circulate new tax plan as party seeks unity on key economic package
Biden aides on Wednesday also discussed a new minimum tax on corporations; a plan to beef up tax enforcement through the Internal Revenue Service; a tax on companies issuing stock “buybacks” to company shareholders; and an overhaul of international tax provisions aimed at raising minimum taxes on multinational firms, the people said.
Among the officials on the White House call were White House National Economic Council Director Brian Deese; Treasury Secretary Janet L. Yellen; House Ways and Means Committee Chair Richard E. Neal (D-Mass.); and Senate Finance Chair Ron Wyden (D-Ore.).
A Treasury spokeswoman declined to comment.
Deputy White House press secretary Andrew Bates said there was an expansive “menu of options” to finance the president’s plan in the works.
“The President is working to pass game-changing investments in economic growth that benefits the middle class, paid for by having the richest taxpayers and big corporations pay their fair share and without raising taxes on any American making less than $400,000,” Bates said in a statement. “The price tag for this legislation is zero.”
Multiple people involved in negotiations said the plans put forward are not final and do not represent a deal, stressing negotiations are fluid. Many Democrats had campaigned on unwinding the Trump tax cuts from 2017, and top tax-minded policymakers in the party have not yet given up on those efforts.
But the potential new plans reflects the scramble among Democrats to find a set of new revenue to pay for their policy ambitions as they struggle to approve Biden’s economic package. Sens. Kyrsten Sinema (D-Ariz.) and Joe Manchin III (D-W.Va.) have raised concerns for months about the extent of the tax hikes proposed by the White House, arguing they risked hurting the competitiveness of American businesses.
Sinema, in particular, has privately voiced staunch opposition to significant tax increases, according to two of the people with knowledge of the call, who chiefly attributed the change in thinking at the White House to the Arizona centrist. A spokesman for Sinema declined a request for comment.
The newly resurfaced ideas could pay for Biden’s plans without technically raising individual, corporate or capital gains tax rates.
Democrats have explored options to raise taxes even if the corporate and individual gains tax rates fall out of the bill.
For instance, U.S. corporations currently face a 21 percent corporate tax, but many firms in reality pay a much lower rate, because they can use deductions and other credits to reduce what they ultimately pay to the IRS. During negotiations, Biden has proposed a 15 percent minimum tax that all companies must pay to establish a floor for corporate taxation. Because this minimum tax would be tied to the amount of revenue reported, corporations could not use tax deductions to zero out their obligations to the IRS.
Another option, spearheaded by Wyden, would have a big impact on the wealthy, while avoiding large-scale income tax hikes on the rich. Under current law, Americans can benefit from enormous increases in the value of their assets — such as their stock holdings — without paying taxes on that additional wealth. Wyden’s “billionaire’s income tax” would change that by levying a new tax every year on the increase in value “tradable” assets owned by billionaires.
Separately, several Senate Democrats, including Wyden, have endorsed a plan to tax companies when they purchase shares of their own companies, a move that boosts the company’s stock price to the benefit of its shareholders. The plan aims to have the tax treatment of stock buybacks work in a similar way to the tax treatment of corporate dividends. Corporate dividends are the traditional form by which corporations give money to shareholders, but when shareholders claim them they pay a tax.
“There’s a lot they can do to raise taxes without the rate hikes, but eliminating the rate hikes on corporations makes it a lot harder because it takes away a lot of revenue. But you can do it, especially if the goal is a lot smaller,” said Howard Gleckman, a policy expert at the Tax Policy Center, a nonpartisan think tank.
The new ideas discussed by the administration officials represent a substantial departure from the more than $2 trillion tax plan put forward by House Democrats. That plan rejected the tax on billionaire wealth and the new corporate minimum tax, but included a corporate tax rate increase and a higher tax rate on the richest Americans.
“Chairman Neal believes in the Ways and Means marked product, including changes to undo the 2017 Republican breaks to big corporations and individuals at the top,” a spokesperson for Neal said in a statement.
The potential shift still left some Democrats uneasy, especially since top party lawmakers had pledged for months to finance their new spending through new taxes on corporations and others that they argued had failed to pay their fair share.
“I stressed the importance of putting an end to America’s two tax codes, and finally showing working people in this country that the wealthiest Americans are going to pay taxes just like they do,” Wyden said in a statement after the meeting, confirming his participation.
By Tony Romm Tony Romm is the congressional economic policy reporter at The Washington Post. Twitter
By Jeff Stein Jeff Stein is the White House economics reporter for The Washington Post. He was a crime reporter for the Syracuse Post-Standard and, in 2014, founded the local news nonprofit the Ithaca Voice in Upstate New York. He was also a reporter for Vox. Twitter