At Monday night’s Met Gala, one of Manhattan’s chicest red carpet events, U.S. Rep. Alexandria Ocasio-Cortez, DN.Y., smiled for the cameras in a white dress with “Tax the Rich “written in sharp red letters on his back. This week, Congressional Democrats released details of the tax changes they hope will do just that.
The changes would fund $ 3.5 trillion in government spending requested by President Joe Biden over the next 10 years. Democrats hope to approve the plan using the reconciliation process in Congress, which allows funding measures to avoid Senate obstructions and pass a simple majority. The reconciliation package was flagged this week amid debate over its policies on climate change, healthcare and education measures.
The income tax rate on those earning more than $ 400,000 a year would drop from 37% to 39.6%, and the capital gains tax would drop from 20% to 25%. Those who earn more than $ 5 million a year would pay an additional 3% income tax. The proposal also increases property taxes, cuts corporate tax rates from a fixed rate of 21% to a graduated rate that peaks at 26.5%, and calls for additional funding to help the Internal Revenue Service to strengthen law enforcement on wealthy Americans. The changes still primarily target income, not the stored wealth from owning valuable businesses, a more controversial approach advocated by Democrats such as Senator Elizabeth Warren of Massachusetts.
In total, Democrats hope the changes will increase federal revenues by $ 2.9 trillion over the next 10 years. They predict an additional $ 600 billion in economic growth, which is the desired $ 3.5 trillion. But a memo noted in capitals, underlined and in bold, “This number is still very preliminary.”
Progressives such as Sen. Bernie Sanders, I-Vt., See $ 3.5 trillion as a spending floor, but moderate Sen. Joe Manchin, DW.Va., insists the reconciliation package should only cost between $ 1,000 billion and $ 1,500 billion. He is also hesitant about clean energy subsidies and a permanent extension of the child tax credit, which would include payments for families with no income. With the Senate split 50-50 between parties, Democrats need 100% membership support and Vice President Kamala Harris’ decisive vote to pass the reconciliation plan. This gives Manchin and his moderate Democratic colleague Senator Kyrsten Sinema of Arizona the power to negotiate changes.
Package policies remained in motion this week as Democrats clashed over health care, including government negotiations over prescription drug prices and Medicare expansion to include vision, hearing and dental benefits. The package will likely continue to change as it goes through the House budget committee and rule writing. House Speaker Nancy Pelosi, D-Calif., Wants this process to be completed and a vote in the House by the end of September, a tall order with infrastructure, debt ceiling and deadlines. government funding arriving this month or next. Lawmakers returned home Wednesday for the two-day break from Yom Kippur with an intimidating to-do list unfinished in Washington.