Republicans, as opposed to those tax increases as expected, also turned their anger on Tuesday against proposed tax breaks they portrayed as subsidies for wealthy elites rather than help for the poor and middle class. Electric vehicles became a rallying symbol as class-warfare overtones echoed through a committee session.
WASHINGTON — To pay for the massive social plans that President Joe Biden envisions, House Democrats began serious work Tuesday on a maneuver worthy of the most agile circus acrobats. They’re looking to squeeze revenue from the elite 2% of Americans who earn more than $400,000 a year while leaving untouched everyone else — who Biden has pledged won’t see any tax increases.
The Democrats are proposing that the top tax rate rise back to 39.6% on individuals earning more than $400,000 — or $450,000 for couples — in addition to a 3% surtax on wealthier Americans with adjusted income beyond $5 million a year. For big business, the proposal would lift the corporate tax rate from 21% to 26.5% on companies’ annual income over $5 million.
“Look, I don’t want to punish anyone’s success, but the wealthy have been getting a free ride at the expense of the middle class for too long,” Biden tweeted Tuesday. “I intend to pass one of the biggest middle class tax cuts ever — paid for by making those at the top pay their fair share.”
The reach for revenue from the wealthy was even billboarded at the ultra-chic Met Gala in Manhattan Monday night. Rep. Alexandria Ocasio-Cortez, D-N.Y., a leading House progressive, wore a white gown with “Tax the Rich” in giant red letters emblazoned on the back (designer Aurora James).
For middle- and low-income people, tax help, not increase, is on offer as the House Ways and Means Committee digs into debate and drafting of tax proposals to both fund and buttress Biden’s ambitious $3.5 trillion rebuilding plan that includes spending for child care, health care, education and tackling climate change.
It’s an opening bid at a daunting moment for Biden and his allies in Congress as they assemble the “Build Back Better” package considered by some on par with the Great Society of the 1960s or even the New Deal of the 1930s Depression.
The proposals call for $273 billion in tax breaks for renewable energy and “clean” electricity, including $42 billion for electric vehicles and $15 billion for a “green workforce” and environmental items. Increases in the child tax credit to $300 a month per child under 6 and $250 monthly per child 6-17, which came in coronavirus relief legislation earlier this year, would be extended through 2025.
The House Energy and Commerce Committee, meanwhile, advanced proposals promoting clean electricity, investments in electric vehicles and other climate provisions. The 30-27 vote along party lines sends the energy measure forward as part of House Speaker Nancy Pelosi’s goal to approve the huge overall package. The energy panel’s $456 billion slice is the most consequential for dealing with climate change and greenhouse gas emissions, along with the tax breaks debated by the Ways and Means Committee.
The Democratic proposals would invest $150 billion in grants to encourage power companies to provide “clean electricity” from renewable sources such as wind and solar. Electricity suppliers would receive grants based on how much clean electricity they provide, as part of Biden’s plan to stop climate-damaging fossil fuel emissions from U.S. power plants by 2035. All GOP lawmakers are expected to vote against the overall legislation. But Republicans are largely sidelined as Democrats rely on a budget process that will allow them to approve the proposals on their own — if they can muster their slight majority in Congress.
Democrats have no votes to spare to enact Biden’s agenda, with their slim hold on the House and with the Senate split 50-50, with Vice President Kamala Harris as the tiebreaker, if there is no Republican support. But one Democratic senator vital to the bill’s fate, Joe Manchin of West Virginia, says the cost will need to be slashed to $1 trillion to $1.5 trillion to win his support. Manchin also has said he will not support a number of clean energy and climate provisions pushed by Democrats.
A day earlier, Biden appeared to respond to concerns about the plan’s size, saying the cost “may be” as much as $3.5 trillion and would be spread out over 10 years as the economy grew. Republican lawmakers, who have denounced the Democratic spending plan as socialist and job-killing, also went after proposed tax breaks on Tuesday.
The Democrats propose to extend to five years the current $7,500 electric vehicle tax credit, with another $4,500 if a car is made by union workers, and $500 more for a U.S.-made battery. But Republicans painted electric vehicles as a bourgeois-bohemian accessory to be subsidized by taxpayers, the latest symbol of excess. “Speaking of outrageous green welfare, this bill allows a near-millionaire family to buy a $75,000 Beamer, Jaguar or Benz luxury electric vehicle — and their maid is forced to send them a $12,500 subsidy from her taxes,” said Rep. Kevin Brady of Texas, the panel’s senior Republican. “Why are blue-collar workers, nurses, teachers and firefighters subsidizing the wealthy and big business with a quarter of a trillion dollars in green welfare checks?”
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