(Bloomberg) — House Democrats on Monday released a package of tax increases that falls short of President Joe Biden’s ambition, an acknowledgment of how politically precarious the White House’s $3.5 trillion economic agenda is for party moderates.
The Democratic proposal from the Ways and Means Committee would raise the top corporate tax rate from 21% to 26.5%, less than the 28% Biden had sought. The top rate on capital gains would rise from 20% to 25%, instead of the 39.6% Biden proposed. Including a 3.8% Medicare surtax on high earners, the top capital gains rate would be 28.8%.
The package of proposals, estimated to raise more than $2 trillion, are slimmed down to appeal to business-minded Democrats, many of whom hail from swing districts. And Democratic leaders, who need the party’s full support to push Biden’s agenda through Congress, will almost certainly pare them down further in the weeks ahead.
The tax proposals provide for “responsibly funding our plans,” including addressing climate change, creating jobs and extending an expanded child tax credit, Ways and Means Committee Chairman Richard Neal said in a statement.
After some details were reported Sunday, the corporate tax hike drew immediate fire from conservatives, a preview of the fight ahead as the House Ways and Means Committee prepares to meet Tuesday to debate the tax portion of the economic package.
With thin majorities in both chambers, Democrats can afford just three defections in the House and none in the Senate as they use a process called budget reconciliation that allows them to bypass Republicans.
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