Senate Democrats have assembled a laundry list of possible tax hikes to help finance their $3.5 trillion spending bonanza, according to an internal committee document obtained by The Post.
Many Democrats are eager to implement the host of corporate and individual tax hikes to fund the $3.5 trillion plan, but Beltway insiders are dubious the more controversial plans — like taxing share buybacks and hefty executive payouts — will make the final bill.
The plans are in their early stages, still being hammered out by Democratic lawmakers, but they include:
- Raising the top corporate tax rate “from 21 percent to a higher rate.” The document doesn’t list a specific rate, but President Joe Biden has previously called for corporate taxes to be raised to 28 percent.
- Taxing stock buybacks, one of Massachusetts Democratic Sen. Elizabeth Warren’s pet projects. When a company buys back its stock, it often gooses the stock price as it takes shares out of circulation. The proposal could apply an “excise tax” to companies that buy back a significant amount of stock. Alternatively, buybacks could be treated as a certain type of dividend to shareholders, according to the document.
- Imposing a “CEO pay disparity” excise tax on companies whose chief executives make more than a certain percentage of the average worker’s pay.
- Reinstating the 39.6 percent top personal income tax rate to replace the 37 percent rate that is in effect now.
- Taxing capital gains at the top individual tax rate for “high-income taxpayers,” which the document defines as people in the top tax bracket.
- Establishing a minimum corporate tax rate of 15 percent of a corporation’s “book income” — even after including certain deductions.
The tax hikes on the table would fund the $3.5 trillion plan, which would include universal prekindergarten, broadened Medicare benefits, free community college and what Democrats say are measures to deal with climate change.
Sen. Mike Crapo, a Republican of Idaho, said in a statement to The Post that he had “serious concerns” about the Democratic “tax-and-spending spree.” He said the proposals could cause immediate and long-term damage to the US economy. Crapo is the ranking Republican member on the Senate Finance Committee.
Top Senate Finance Committee Democrats, including Chairman Ron Wyden of Oregon, didn’t immediately respond to The Post’s request for comment.
President Joe Biden had promised not to raise taxes on households making less than $400,000 a year. It isn’t clear if these proposals would hit individuals making less than that threshold.
The House, under Majority Leader Nancy Pelosi of California, last month passed and early framework of the $3.5 trillion spending bill.
Meanwhile, Warren has called multiple times for taxes that will ensure the wealthiest are “paying their fair share in taxes.”
Other individual tax hikes are focused on taxing billionaires — and requiring they pay taxes annually on their assets. According to the document, this “would apply to an estimated 600 people and raise hundreds of billions.” Democrats are also considering taxing mega retirement accounts, estates, net investment income, derivatives and carried interest.
Other proposals include increasing funding for the Internal Revenue Service so it can better collect taxes, as well as a tax on fossil fuels, carbon and plastics.
For now, D.C. insiders remain skeptical how many of the proposals will make it into the final bill. “It’s just a laundry list of proposals with no price tag attached,” says James Lucier, managing director at Capital Alpha, a Washington-based policy research outfit. “It hardly seems like a definite plan to do anything.”
According to the memo, Democrats are considering a range of options to help pay for the massive spending proposal. Getting the entire Democratic caucus on board will prove to be a challenge.
Democrats are already struggling to unify moderate members like Sen. Joe Manchin of West Virginia, who on Thursday suggested hitting pause on the massive spending bill.
Democrats are aiming to raise $3.5 trillion over 10 years, sources with knowledge of the process told The Post. But it’s more likely they’ll only receive approval for around $1.5 trillion worth of tax increases.
“They will not have a consensus within the Democratic caucus to get all of the tax proposals approved and in the final legislation,” Charles Myers, chairman of advisory firm Signum Global Capital told The Post. “So I would view all of this as just the initial wish list that will ultimately be whittled down.”