House Democrats set 26.5% corporate tax rate to fund Biden’s budget

Democrats in the House of Representatives want to reduce Joe bidenThe President’s Proposed Tax Hikes on Corporate Income and Capital Gains, Part of $ 2.9 Billion in Tax Hikes to Fund President’s Social Safety Net Expansion American.

The draft tax plan – which was obtained by the Financial Times – was released to members of the House Ways and Means Committee on Sunday, which is responsible for tax legislation in the lower house of Congress.

As part of the plan, the U.S. corporate tax rate would drop from its current level of 21% to 26.5%, lower than the 28% level proposed by Biden earlier this year.

House Democrats are also looking to increase the tax paid by investors on capital gains to 25% from the current rate of 20% – significantly lower than Biden’s expected rate of 39.6%, his target of ordinary income tax for wealthy Americans.

However, House Democrats are proposing a 3% surtax on income of more than $ 5 million a year, which would target wealthier American households. Biden had not supported such a surcharge.

Despite the changes, the White House has responded enthusiastically to the plan.

“[It] made significant progress in ensuring that our economy rewards work and not just wealth by reducing taxes for middle-class families; reform the tax code to prevent the offshoring of American jobs; and making sure that the richest Americans and big business pay their fair share, ”White House spokesman Andrew Bates said.

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The House Democratic tax drafters’ plan emerged as lawmakers in Biden’s party seek consensus on the details of the largest and most ambitious bill on the president’s economic agenda – a $ 3.5 billion program public investments in child care, education, health care and green energy.

If approved, the plan would eclipse both the $ 1.9 billion fiscal stimulus passed in March and the $ 1.2 billion bipartisan infrastructure bill that Biden is separately trying to squeeze through the government. Congress.

But there are deep divisions among Democrats over the package that will need to be resolved in the coming weeks, given the low majorities held by his party in both houses of Congress. On Sunday, West Virginia Democratic senator and party moderate Joe Manchin reiterated that the cost of the bill was too high for him to support.

“There is no rush to do it right now. We have no urgency, ”Manchin said, adding:“ If I can’t go home and explain it, I can’t vote for, ”he said.

But a sign of growing concern over the fate of the legislation, Bernie Sanders, the progressive senator from Vermont, warned that it would be a “disaster” if no deal was reached because Manchin blocked a deal.

“[Manchin] has the right to be heard. He is a member of the United States Senate for the great state of West Virginia. He has to sit down with all of us and we’ll fix it, ”Sanders said.

In the draft text proposed by House Democrats, the increase in corporate tax to 26.5% would only apply to companies with income above $ 5 million, a sign that they want to protect small businesses from a higher levy.

For smaller businesses with income below $ 400,000, the corporate tax rate would drop from 21% to 18%. House Democrats also plan to fund the $ 3.5 billion bill by reducing the cost of prescription drugs and strengthening enforcement of existing tax laws to fight evasion.

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