The Biden tax plan fades from the original scope in the final stretch.

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Biden tax plan

At half the original size – the Biden tax plan, part of President’s larger domestic plan, is being scrapped and realigned as Democrats inch closer to appeasing their most recalcitrant members and finalizing what is now a $1.75 trillion package.

How to pay for it all continued to prove a source of contention Tuesday, with a mooted billionaires’ tax drawing criticism for being overly burdensome or worse. This results in significant reductions, if not total eliminations, of policy targets ranging from paid family leave to child care to senior dental, vision, and hearing aid coverage.

Climate change policies that were once robust are losing some of their punch due to a move away from penal actions against polluters and favor incentivizing clean energy incentives.

According to a source who sought anonymity to discuss the private deliberation, Biden met Tuesday evening with two recalcitrant Democrats — West Virginia Sen. Joe Manchin and Arizona Sen. Kyrsten Sinema. The President is seeking to reach a deal ahead of his departure for global summits later this week.

In sum, Biden’s program remains a monumental undertaking – one that might easily exceed $2 trillion in what would be the largest congressional effort in decades. However, it is significantly leaner than the President, and his party had initially proposed.

Biden tax plan
Biden tax plan

Amidst factional strife, ‘something major’ affords a lifeline for the Biden tax plan.

According to another insider who sought anonymity to convey her private remarks to the caucus, House Speaker Nancy Pelosi assured lawmakers they were on the cusp of “something major, transformative, historic, and bigger than anything else” undertaken in Congress.

Rep. Joyce Beatty, D-Ohio, chair of the Congressional Black Caucus, quipped that they knew they were close-following a meeting with Biden at the White House. And she stated unequivocally that their footprints and fingerprints are all over the ongoings.

Still, serious disagreements persist among Democrats on the broad aspects of the proposal and the tax revenue needed to pay it.

According to press secretary Jen Psaki of the White House, Biden still hoped to have a deal in place to signal foreign leaders that the US government was responding effectively on climate change and other major concerns. However, she conceded that might not be possible, compelling him to continue working on the package remotely.

She cautioned against failure in favor of compromise.

Psaki explained that the alternative to what is being negotiated is not the original package but nothing.

On Tuesday, more legislators traveled to the White House for negotiations. They emerged optimistic that the eventual deal would be substantial, despite the revisions and cuts imposed by Manchin and Sinema.

Collectively, the two senators landed a one-two combination, compelling supporters to slash health care, child care, and other spending and compelling Democrats to rethink their plans to reverse Trump-era corporate and wealthy tax cuts.

Biden tax plan
Biden tax plan

Funding the Biden tax plan

Fixing the revenue side is imperative since Biden maintains that any new spending will be fully funded and not added to the national debt. He insists that any new taxes will hit only the wealthy, those earning more than $400,000 per year or $450,000 for couples and that corporations must stop avoiding taxes and begin paying their “fair share.”

However, the White House had to revise its tax plan after Sinema voiced opposition to her party’s first proposal to increase corporate and wealthy tax rates. With a 50-50 Senate, Biden’s party does not have any votes to hand.

Rather than that, Democrats were preparing to reveal a new plan for taxing billionaires’ assets to win over Sinema and others. And on Tuesday, they revealed a proposal to pay a 15% minimum tax on corporations with more than $1 billion in revenue, garnering support from Sinema.

Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee and the effort’s leader, stated that the crux of it: Americans have learned over the last few months that billionaires have been paying little or no taxes for years.

According to Wyden’s evolving plan, the billionaires’ tax would apply to the wealthiest Americans, a group of fewer than 1,000 folks. It would force assets with more than $1 billion in assets or three years of consecutive income of $100 million to pay taxes on stock and other tradeable asset gains rather than waiting until holdings are sold.

A comparable billionaire’s tax would apply to non-tradeable assets, such as real estate, but the tax would be postponed until the asset was sold.

The tax rate on billionaires had not been determined in aggregate, although it was projected to be at least 20% on capital gains. Democrats claim it could generate $200 billion in revenue over ten years, which would help finance Biden’s plan.

The Biden tax plan headwinds

Republicans dismiss the billionaires’ tax, and some have said it might be challenged in court.

And notable Democrat colleagues expressed alarm about the billionaires’ tax, arguing that just repealing the 2017 tax cuts by raising top rates was a more open and straightforward approach.

Rep. Richard Neal, D-Mass., chair of the House Ways and Means Committee.  declared that their plan looks better every day.  

Individuals earning more than $400,000, or $450,000 for couples, would see their top individual income tax rate increase from 37% to 39.6% under the bill approved by Neal’s panel. The corporate tax rate will go up from 21% to 26.51%. Additionally, the bill seeks a 3% surtax on the wealthiest Americans with adjusted income above $5 million a year.

Biden tax plan
Biden tax plan

Manchin is pressing his party to reassess the expansion of health, child care, and climate change programs that he deems as wasteful or needless government entitlements.

Plans to expand Medicare coverage for seniors with dental, vision, and hearing aid benefits; child care help; free pre-kindergarten; a new four-week paid family leave program; and a more restricted plan to reduce prescription drug costs are still being considered.

Sen. Manchin, a coal-state senator, dismissed Biden’s prior clean energy approach as too penalizing on fossil-fuel producers. Rather than that, the White House adopted the idea of expanding grants and loans to promote clean energy sources.

Manchin’s opposition may impact another tax proposal – a plan to increase the IRS’s resources for pursuing tax evaders. He stated that during their weekend visit at the President’s house in Delaware, he informed Biden that the plan was “messed up” and would allow the government to monitor bank accounts.

Democrats seek to reach consensus by the end of the week, setting the stage for a House vote on a related $1 trillion bipartisan infrastructure bill before routine transportation funding expires Sunday. Separate roads-and-bridges legislation stalled when progressive senators refused to approve it until the larger Biden bill was completed.

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