Billionaire tax takes shape as Biden pushes for budget deal

Democrats are working frantically to shore up the revenue side of President Joe Biden’s domestic package

Congress Biden Manchin (Copyright 2021 The Associated Press. All rights reserved)

Democrats are working frantically to shore up the revenue side of President Joe Biden’s domestic package, poised to unveil a new billionaires’ tax to help pay for his social services and climate change plan after earlier tax plans fizzled.

Biden said Monday he’s hopeful the talks with Congress can wrap up overall agreement on the package this week. It's tallying at least $1.75 trillion, and could still be more. Biden said it would be “very, very positive to get it done” before he departs for two overseas global summits.

“That’s my hope,” the president said before leaving his home state of Delaware for a trip to New Jersey to highlight the child care proposals in the package and a related infrastructure measure. “With the grace of God and the goodwill of the neighbors.”

Resolving the revenue side is key as the Democrats scale back what had been a $3.5 trillion plan, insisting all the new spending will be fully paid for and not pile onto the debt. Biden vows any new taxes would hit only the wealthy, those earning more than $400,000 a year, or $450,000 for couples.

The White House had to rethink its tax strategy after one key Democrat, Sen. Kyrsten Sinema D-Ariz., objected to her party's initial proposal to raise tax rates on wealthy Americans by undoing the Trump-era tax cuts on those earning beyond $400,000. Sinema also opposed lifting the 21% corporate tax rate. With a 50-50 Senate, Biden has no votes to spare in his party.

Instead, to win over Sinema and others, the White House has been floating a new idea of taxing the assets of billionaires and another that would require corporations to pay a 15% minimum tax, regardless of if they show any profits. Those both appear to be gaining traction with another pivotal Democrat, Sen. Joe Manchin D-W.Va.

Democrats on the Senate Finance Committee, led by Sen. Ron Wyden of Oregon, are prepared to roll out the tax revenue plan in a matter of days. It is likely to include other revenue-raising tax measures, including a plan to beef up the Internal Revenue Service to go after tax scofflaws.

Once Democrats agree to the tax proposals, they can assess how much is funding available for Biden's overall package to expand health care, child care and other climate change programs.

Democrats were hoping Biden could cite major accomplishments to world leaders later this week. They are also facing an Oct. 31 deadline to pass a related $1 trillion bipartisan infrastructure package of roads, broadband and other public works before routine federal transportation funds expire.

“We need to get this done,” Biden said in remarks at a New Jersey transit center.

Biden huddled with the conservative West Virginia Democrat Manchin and Senate Majority Leader Chuck Schumer at the president’s Delaware home on Sunday as they work on resolving the disputes between centrists and progressives that have stalled the bill. A person who requested anonymity to discuss Manchin’s position told The Associated Press the senator is agreeable to the White House’s new approach on the tax proposals.

Picking up a populist theme sounded during the presidential campaign, Biden is pushing to have corporations and the wealthy pay a “fair share” and end the practice of some of the wealthiest Americans skipping out on any taxes.

The billionaires' tax is being modeled on a 2019 bill from Wyden to treat assets as income. Another idea, for a 3% ultra-rich surtax, has been proposed by Sen. Elizabeth Warren, D-Mass.

Under Wyden's emerging plan, the billionaires' tax would hit the wealthiest of Americans, fewer than 1,000 people. It would require those with assets of more than $1 billion, or three-years consecutive income of $100 million, to pay taxes on the gains of stocks and other tradeable assets, rather than waiting until holdings are sold.

A similar billionaire's tax would be applied to non-tradeable assets, including real estate, but it would be deferred with the tax not assessed until the asset was sold.

Overall, the billionaires' tax rate has not been set, but it is expected to be at least the 20% capital gains rate.

Separately, Sinema's objection to raising corporate tax rates from 21% to 26.5%, as Democrats had proposed for those firms earning more than $5 million a year, has led the White House to float plans to keep the current 21% rate but add a new 15% corporate minimum. That would try to end the practice of big companies claiming so many write-offs that they pay little to no tax.

After months of start-and-stop negotiations, Biden's overall package is now being eyed as at least $1.75 trillion. But it could still climb considerably higher, according to a second person who insisted on anonymity to discuss the private talks.

House Speaker Nancy Pelosi said Sunday on CNN even though it's less that what was first envisioned, "it’s still bigger than anything we have ever done in terms of addressing the needs of America’s working families."

Disputes remain over far-reaching investments, including plans to expand Medicare coverage with dental, vision and hearing aid benefits for seniors; child care assistance; and free pre-kindergarten.

Pelosi, D-Calif., said that Democrats were still working to keep in provisions for four weeks of paid family leave.

Pelosi said she expected an agreement by week’s end, paving the way for a House vote on the $1 trillion bipartisan infrastructure bill. The Senate had approved that over the summer, but the measure stalled during deliberations on the broader Biden bill.

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Associated Press writers Alan Fram, Hope Yen and Colleen Long contributed to this report.