Finance

White House framework includes tax increases, leaves out billionaire tax

President Biden delivers remarks at NJ Transit Meadowlands Maintenance Complex in Newark, N.J. on Monday, October 25, 2021.
UPI Photo

The social-spending framework the White House released Thursday includes tax increases focused on high-income households and corporations, but leaves out a proposal to annually tax billionaires’ investment gains that had received considerable attention this week.

Tax proposals in the framework that target corporations include a 15 percent corporate minimum tax, a 1 percent surcharge on stock buybacks and international tax changes that are in line with an agreement reached by more than 100 countries earlier this month. 

To increase taxes on high-income individuals, the framework calls for creating a surtax on the incomes of multimillionaires and billionaires, applying a tax on investment income created by ObamaCare to certain business income and extending a limitation on excess business losses. The surtax would be 5 percent for incomes over $10 million, and an additional 3 percent for incomes above $25 million.

The framework also would provide the IRS with more money for tax enforcement.

However, the framework does not include some of the other tax ideas that Democrats had considered but were divided over.

One proposal that was left out was a plan from Senate Finance Committee Ron Wyden (D-Ore.) to annually tax billionaires’ unrealized capital gains, which had drawn concerns from Sen. Joe Manchin (D-W.Va.) and a number of House Democrats.

Wyden on Thursday spoke positively about the corporate and international provisions in the framework. But he said he is following up with the administration about the proposal for a surtax on very high-income taxpayers.

“The billionaires have figured out a way to get out of paying income taxes by not taking a wage,” he said. “If this is not done carefully, you could have the kind of situation where professional basketball players, because they get paid a wage, would have their taxes go up, and the possibility of the owners, who we know are in a position to not take a wage, would continue to pay little or no income taxes.”

Another tax proposal left out of the framework are the tax-rate increases that are opposed by Sen. Kyrsten Sinema (D-Ariz.).

Additionally, the framework does not mention a proposal to increase the amount of information the IRS receives about bank accounts, which some Democrats had criticized and also has been the subject of significant opposition from Republicans and banking groups. An administration official said that as of now, it appears robust funding for IRS enforcement will be included but that the bank proposal is out.

President Biden offered the new framework to Democratic lawmakers on Thursday ahead of his planned trip to Europe for a climate conference, hoping to unify progressives and more moderate lawmakers who have been split over the party’s plans for a much larger social spending and climate package.

The White House said that the spending in the framework would be fully offset. In total, the administration estimates that its proposed offsets could raise up to about $2 trillion, including both tax increases and the repeal of a rule related to prescription drugs.

The framework does not mention the cap on the state and local tax (SALT) deduction, which a number of Democrats from high-tax states want to see repealed. Repealing or increasing the cap would lose federal revenue.

However, Democratic lawmakers indicated that changes to the SALT deduction cap would still be included in a final piece of legislation.

“SALT will be in the end game,” House Ways and Means Committee Chairman Richard Neal (D-Mass.) told reporters Thursday.

Rep. Tom Suozzi (D-N.Y.), one of the leading advocates for repealing the cap, tweeted that he is “confident it will be part of the final deal.”

Tags Biden tax plan Biden tax policy Joe Biden Joe Manchin Kyrsten Sinema Richard Neal Ron Wyden social spending plan

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