On The Money — Democrats eye tough choices as deadline looms
Biden pushes back at Democrats on taxes
President Biden is pushing to prevent congressional Democrats from scaling back his tax proposals, as lawmakers work on a $3.5 trillion social spending package aimed at advancing the president's economic agenda.
The White House and congressional Democrats both want to raise taxes on the wealthy and corporations, and strengthen tax enforcement, to pay for investments in areas such as child care, health care and climate.
But the legislation that the House Ways and Means Committee approved Wednesday raised some taxes by less than Biden had previously proposed, and left out some of Biden's proposals altogether.
It remains to be seen whether the administration can get lawmakers to be more aggressive on tax increases and enforcement, given Democrats' narrow majorities in Congress.
In recent days, the White House has stepped up its messaging and lawmaker-outreach efforts around the social-spending package, and in particular has been emphasizing its proposals to raise taxes on high-income households and corporations and to increase IRS enforcement against the wealthy.
The tax proposals were front and center in a speech Biden gave at the White House on Thursday.
"I'm not out to punish anyone. I'm a capitalist. If you can make a million or a billion dollars, that's great. God bless you," Biden said. "All I'm asking is you pay your fair share. Pay your fair share just like middle-class folks do. But that isn't happening now."
Biden pushed back on Republican criticisms of his economic plans, saying GOP lawmakers would "rather protect the tax breaks of those at the very top than give tax breaks to working families."
The new efforts came as House panels advanced their portions of the $3.5 trillion package. Notably, the Ways and Means Committee advanced a portion that includes tax-increase provisions as well as provisions that extend expansions of tax credits that benefit low- and middle-income households.
The committee's proposal is less aggressive in raising taxes on high-income households and corporations than proposals Biden released earlier this year. House Democrats are proposing smaller increases in the corporate tax rate and the top capital gains rate than Biden had. Additionally, the committee left out several of Biden's revenue raising proposals, including those to tax capital gains at death and to increase the amount of information financial institutions report to the IRS about bank accounts.
White House officials have publicly spoken positively about the Ways and Means Committee bill, saying it's a key step toward accomplishing Biden's goals on taxes. At the same time, the administration is pushing Congress to do more.
Biden the day of his speech also spoke on the phone with House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Charles Schumer (D-N.Y.) about his economic agenda.
A readout of the call from the White House emphasized unity with the two Democratic leaders.
It said that the three policymakers "reaffirmed that, as we act at this crucial moment to ensure working families are dealt back into our economy, it is only fair that we pay for these tax cuts and investments by repealing the Trump tax giveaways to the wealthiest Americans and big corporations, who often pay little to nothing in taxes."
The administration has made touting the proposal on IRS reporting a focus in recent days. The proposal calls for requiring financial institutions to provide the IRS with information about account inflows and outflows in an effort to prevent wealthy people from avoiding paying taxes they already owe.
"It's about the super-wealthy finally beginning to pay what they owe - what the existing tax code calls for - just like hard-working Americans do all over this country every Tax Day," Biden said in his speech Thursday.
Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig also sent letters to Ways and Means Committee Chairman Richard Neal (D-Mass.) last week in support of the information-reporting proposal.
"The objective of this reporting regime is to help the IRS pursue high-end noncompliance by providing some information about opaque income streams that disproportionately accrue to the top," Yellen wrote.
There are indications that some type of proposal on bank account reporting could make it into the final legislation. Neal said Wednesday that his committee is "in conversations with the administration on reporting proposals that target sophisticated tax avoidance and evasion without impacting middle-class and working Americans."
Former congressional tax aides say it's not surprising that the White House is seeking to emphasize its position on taxes during the negotiations over the social-spending package.
"It seems fairly predictable to me that they're trying to get Congress to support as much of the president's agenda as they can," said Ryan Abraham, a former Senate Finance Committee aide who is now a principal at EY's Washington Council.
The White House may also be hoping that Senate Democrats propose tax increases that go beyond House Democrats' legislation. Senate Finance Committee Chairman Ron Wyden (D-Ore.) has expressed interest in tax-increase options that were not in the Ways and Means bill, such as taxing billionaires' investment gains annually and an excise tax on stock buybacks.
"This policy is far from done," Abraham said.
At the same time, Biden has to get nearly every Democratic House member and every Democratic senator to vote for a final piece of legislation, and some moderates have already raised concerns about tax and spending proposals in House Democrats' bill.
On Wednesday, Biden met with Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.), two moderates who have raised concerns about the size of the social-spending package.
Democrats will also face a major effort from business groups and Republicans to advocate against his tax proposals. For example, a group of financial industry and business organizations on Friday urged House leaders to not adopt Biden's IRS information reporting proposal, saying it is not well targeted at uncovering instances of wealthy people not complying with tax laws.
Congressional observers say Biden will need to work to get moderates and progressive to reach a consensus.
"When the political margins are very tight, you just can't ignore that," said Jorge Castro, a former congressional aide and senior IRS official who now is a co-leader of the tax-policy practice at Miller & Chevalier.