With corporate tax off the table, U.S. Democrats turn to billionaires to fund spending bill
Oct. 25 (Reuters) – America’s Democrats are expected to unveil a tax plan this week that would seek to raise hundreds of billions of dollars from the country’s roughly 700 billionaires to help fund expanding the social safety net and tackling the climate change.
Democrats have switched to the unorthodox plan in the face of opposition from one of their own senators, Kyrsten Sinema, to increasing the corporate tax rate and the highest personal income tax rate to pay for the hefty spending plan that is a mainstay of Democratic President Joe Biden’s national agenda.
Democrats are rushing to push Biden’s climate and social spending agenda through Congress ahead of the G20 meeting of world leaders that begins on Saturday. The social spending plan is expected to be between $ 1.5 trillion and $ 2000 billion.
The progressive wing of the party had wanted a much more ambitious plan, but opposition from Sinema and fellow Democratic Senator Joe Manchin forced the White House to make concessions and lower the overall cost.
Democrats have for years advocated for higher income and corporate tax rates, saying wealthy Americans and businesses should pay more to fund new social benefits, but their struggle to adopt such measures underscores the challenges facing them. the party is facing.
Currently, wealthy Americans do not have to pay taxes on their accumulations of wealth, such as real estate, stocks, and works of art, as they are only taxed when an asset is sold.
As part of the “billionaires’ income tax” proposal, the federal government would require billionaires to pay taxes on the increased value of assets such as stocks on an annual basis, whether they sell or sell. not these assets.
They could also take deductions for any annual loss in value of those assets.
The plan has the backing of the White House.
US Treasury Secretary Janet Yellen on Sunday refused to qualify the measure as a “wealth tax”.
“It is not a wealth tax, but a tax on the unrealized capital gains of exceptionally wealthy people,” Yellen said in an interview on CNN.
Critics of the plan say it will force billionaires out of the stock market, where asset valuation is easier, and into more opaque markets such as real estate and art.
House Speaker Nancy Pelosi said on Sunday the plan was very attractive, but could only bring in $ 200-250 billion, forcing fellow Democrats to rely on other sources of income to fully pay for their plan.
“The billionaire tax… has an appeal, but it doesn’t make as much money,” she told CNN. Pelosi said on Sunday that the tax plan could be presented as early as Monday, but sources in Congress say it is still being finalized.
Pelosi said lawmakers had an array of other options to fund the spending bill even without the corporate tax rate hike, including better law enforcement and international tax harmonization.
Biden administration officials said they were confident Congress would approve legislation to implement a global minimum corporate tax accepted by 136 countries.
Reporting by Jarrett Renshaw; Editing by Peter Cooney and Howard Goller
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