House Democrats are looking to raise the corporate tax rate to 26.5 percent as a way to help pay for their $3.5 trillion social spending plan, according to a Democratic source familiar with the plans.
A 26.5 percent rate would be higher than the current rate of 21 percent but lower than President BidenJoe BidenUN meeting with US, France canceled over scheduling issue Schumer moves to break GOP blockade on Biden's State picks GOP Rep. Cawthorn likens vaccine mandates to 'modern-day segregation' MORE's proposed rate of 28 percent.
House Democrats are also eyeing an increase in the top capital gains rate from 20 percent to 25 percent, which is significantly less of an increase than Biden proposed. And they are considering raising the top individual income tax rate from 37 percent to 39.6 percent while also imposing a 3 percentage point surtax for people with income above $5 million, the source said.
House Democrats are proposing a host of other tax increases as well, including limiting a deduction for noncorporate business income, estate tax changes, increased tobacco taxes and increasing a minimum tax on corporations' foreign earnings, according to a document that was circulated on Sunday and obtained by The Hill.
The document gives a preliminary estimate that the tax ideas in total, along with savings from drug-price changes, would raise about $2.9 trillion in revenue. The document said that the $3.5 trillion in spending would be fully offset after also accounting for $600 billion generated by economic growth.
The House Ways and Means Committee has yet to formally release legislative text on tax increases, so details could still change. The committee started considering its portion of the social-spending package last week, and is scheduled to continue its markup on Tuesday.
A final piece of legislation will have to be approved by Democrats in both the House and the Senate, as well as the White House.
White House spokesman Andrew Bates said in a statement Sunday that the tax ideas under discussion by the Ways and Means Committee meet "two core goals" of Biden: not raising taxes on Americans making under $400,000 and reversing parts of former President TrumpDonald TrumpUN meeting with US, France canceled over scheduling issue Trump sues NYT, Mary Trump over story on tax history McConnell, Shelby offer government funding bill without debt ceiling MORE's tax cuts for the wealthy and corporations.
Bates added that Biden looks forward to continuing to work with Ways and Means Committee Chairman Richard NealRichard Edmund NealDemocrats confront 'Rubik's cube on steroids' Biden pushes back at Democrats on taxes Want a clean energy future? Look to the tax code MORE (D-Mass.) and Senate Finance Committee Chairman Ron WydenRonald (Ron) Lee WydenA Democratic plan to wipe out independent contractors Biden pushes back at Democrats on taxes Want a clean energy future? Look to the tax code MORE (D-Ore.) on advancing his economic agenda.
This article was updated to correct the proposed corporate tax rate percentage.