On The Money — Presented by Wells Fargo — Democrats advance tax plan through hurdles
Happy Wednesday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: thehill.com/newsletter-signup.
Today’s Big Deal: A key step toward passing a major tax overhaul through President Biden’s multi-trillion infrastructure and social services bill. We’ll also look at a bill to plunge the Fed into the fight over climate change and a plea from CEOs about the debt limit.
But first, a weird conversation with an AI simulation of Jerome Powell.
For The Hill, I’m Sylvan Lane. Write me at firstname.lastname@example.org or @SylvanLane. You can reach my colleagues on the Finance team Naomi Jagoda at email@example.com or @NJagoda and Aris Folley at firstname.lastname@example.org or @ArisFolley.
Let’s get to it.
The House Ways and Means Committee on Wednesday approved a major portion of Democrats’ $3.5 trillion social spending package, including provisions that would raise taxes on high-income individuals and corporations in order to offset the cost of new spending:
- The committee advanced the legislation by a near party-line vote of 24-19.
- Rep. Stephanie Murphy (D-Fla.) joined Republicans in voting against the measure.
- It now heads to the Budget Committee, which will combine the various pieces of the spending package approved by House panels.
The legislation approved by the Ways and Means Committee on Wednesday includes a wide range of Democrats’ priorities:
- It would expand infrastructure financing tools, expand the low-income housing tax credit and extend and expand renewable energy tax credits.
- It also would extend through 2025 much of the child tax credit expansion that Democrats enacted earlier this year, while permanently making the credit fully refundable so that the lowest-income families can receive the full credit amount.
The Ways and Means Committee’s measure also includes provisions to pay for new spending and tax breaks elsewhere in the package. It would:
- Raise the corporate tax rate for income above $5 million from 21 percent to 26.5 percent
- Raise the top individual income tax rate from 37 percent to 39.6 percent
- Raise the top capital gains rate from 20 percent to 25 percent
- And impose a 3-percent surtax on individuals’ income above $5 million.
It also would provide the IRS with an additional $80 billion to strengthen tax enforcement and modernize its technology. Naomi and Aris break it down here.
A MESSAGE FROM WELLS FARGO
How a D.C. florist is rebuilding with PPP loans
Le Printemps floral shop in D.C. was able to stay open during the pandemic with two Paycheck Protection Program (PPP) loans booked through Wells Fargo.
LEADING THE DAY
CEOs urge Congress to raise debt limit or risk ‘avoidable crisis’
The Business Roundtable on Wednesday sent a letter to congressional leaders warning that they could create an economic crisis if they fail to swiftly raise the debt limit.
The lobbying group, which represents CEOs at some of the nation’s largest companies, is among the first high-profile business organizations to publicly weigh in on the debt ceiling, indicating that Congress’ inaction on the issue is making corporate America nervous.
“Failure to lift the U.S. federal debt limit to meet U.S. obligations would produce an otherwise avoidable crisis and pose unacceptable risk to the nation’s economic growth, job creation and financial markets,” Business Roundtable CEO Joshua Bolten and Walmart CEO Doug McMillon wrote in a letter to congressional leaders.
The executives wrote that continued inaction on the debt limit could cause an erosion of the nation’s credit rating that would saddle the federal government and U.S. corporations with higher borrowing costs amid a deadly pandemic. The Hill’s Karl Evers-Hillstrom has more here.
Bill would force Fed to defund fossil fuels
Three progressive House Democrats introduced a bill Wednesday that would force the Federal Reserve to break up banks if they do not reduce the carbon emissions they finance in line with the Paris climate accord.
The bill, called the Fossil Free Finance Act, orders the Fed to take unprecedented steps meant to steer financial support away from oil, gas, coal and companies by unraveling banks who refuse to comply. The measure also covers financing the destruction of natural forests.
How it works: Under the bill, banks with more than $50 billion in assets must develop plans to reduce 50 percent of the carbon emissions they finance by 2030 and 100 percent of their financed carbon emissions by 2050; end new and expanded fossil fuel-related projects after 2022; end the financing of all fossil fuel projects after 2030; and halt thermal coal financing after 2024.
- Banks that fail to submit or adhere to Fed-approved emission reduction plans could face serious penalties, including being forced to divest assets and losing their deposit insurance from the Federal Deposit Insurance Corporation.
- Such penalties are rarely imposed, and only in serious cases of fraud, mismanagement or other dangerous or illegal conduct.
The prognosis: While President Biden and Democrats have proposed sweeping measures to curtail carbon emissions, the Fossil Free Finance Act has little chance of becoming law. The bill would almost certainly be defeated by a Republican filibuster in the Senate, even if enough moderate Democrats vote in favor of the bill in the House. I have more on the measure, and why it’s been introduced, here.
LABOR OFFICE TEST
OSHA faces big challenge with Biden vaccine mandate
President Biden will be relying heavily on a small division of the Labor Department to implement his new vaccine mandate for the private sector, posing perhaps the biggest test for an office that has faced funding and personnel challenges in recent years.
- The Occupational Safety and Health Administration (OSHA), largely understaffed during the Trump administration, is now tasked with crafting Biden’s emergency rule on COVID-19 vaccines and testing that will apply to companies with at least 100 employees.
- The high-profile role is likely to make OSHA a target of attacks from many Republicans and those in the business community who view the mandate as government overreach.
“OSHA’s never been a beloved agency for Republicans. They’ve always gone after OSHA for interfering with corporate autonomy,” said Jordan Barab, former OSHA deputy assistant secretary in the Obama administration. The Hill’s Alex Gangitano explains here.
PRESENTED BY WELLS FARGO
D.C. small businesses receive $10M from Wells Fargo
Eddie Lofton of JC Lofton Tailors on U Street is rebuilding his business with a grant from nonprofit LISC D.C.
Wells Fargo’s Open for Business Fund, a small business recovery effort has donated $10M to nonprofits that support District businesses to date.
Good to Know
Treasury Secretary Janet Yellen is pushing House Democrats to do more to stop tax cheats.
Here’s what else have our eye on:
- President Biden met Wednesday with Sens. Kyrsten Sinema (D-Ariz.) and Joe Manchin (D-W.Va.) to hear their concerns about Democrats’ plans to pass a $3.5 trillion reconciliation package, according to sources familiar with the plans.
- Rep. Debbie Wasserman Schultz (D-Fla.) said Tuesday that adherence to public health guidance and increased vaccination rates are needed to keep small businesses afloat during the coronavirus pandemic.
Lawmakers are pressing Facebook over the potential negative implications of its products on teens after a bombshell report detailed the company’s internal research on the effect Instagram has on teens’ mental health.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.