HILL TAX BRIEFING: Democrats Detail Tax Hike Alternatives

Democratic lawmakers Tuesday rolled out a pair of proposals to tax corporations and the wealthy without raising standard tax rates, their latest bid to find consensus behind revenue-raising measures to fund President Joe Biden’s economic agenda.

Senate Finance Chairman Ron Wyden (D-Ore.) joined with Sens. Elizabeth Warren (D-Mass.) and Angus King (I-Maine) on Tuesday to release a proposed 15% minimum tax for corporations, which would apply to companies that report more than $1 billion in profits to shareholders.

The minimum tax would apply to about 200 companies, according to a summary, and King estimated it would raise $300 billion to $400 billion over a 10-year window.

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“This is, in effect, the tax on companies like Amazon that report $10 billion in profits to their shareholders, to the public, set their CEO pay based on that and then turn around to the IRS and say ‘Hey, thanks to all the loopholes, they plan to pay nothing in taxes,’” Warren told reporters.

Warren said the plan is backed by the White House and Treasury Department.

The proposal also earned the approval of Sen. Kyrsten Sinema (D-Ariz.), who issued a statement describing the proposal as a “commonsense step” towards ensuring profitable corporations pay a reasonable amount in taxes.

Sinema’s opposition to planned hikes to the top corporate and individual tax rates has negotiators looking at alternative ways to pay for the social spending plan.

Read more from Laura Davison.

‘Billionaire Tax': Wyden on Tuesday night also unveiled his plan to tax the unrealized capital gains of the ultra wealthy.

The plan seeks to tap some of the $5 trillion in untaxed investment gains held by a group of 700 billionaires, who have more than doubled their collective net worth in the last five years according to the Bloomberg Billionaires Index.

“There are two tax codes in America. The first is mandatory for workers who pay taxes out of every paycheck. The second is voluntary for billionaires who defer paying taxes for years, if not indefinitely,” Wyden said in a statement.

Under current law, investment returns are taxed only when assets are sold. But billionaires rarely sell those assets, count them as income, or get taxed for them.

“Only taxpayers with more than $100 million in annual income or more than $1 billion in assets for three consecutive years would be covered by the proposal,” according to a summary of the plan.

Most assets would be subject to long-term capital gains tax, which is currently 23.8%. Some illiquid assets would face additional charges, but rates wouldn’t rise above 49%, according to a detailed outline of the plan.

The wealthy were already pushing back against the proposal in advance of the legislative rollout.

“Eventually, they run out of other people’s money and then they come for you,” Elon Musk, the world’s richest person, tweeted Monday. On the same day, his personal wealth increased by around $36.2 billion.

Laura Davison has more.

A Legislative Slog

Negotiations over advancing the tax-and-spend plan have dragged on for months, missing an initial deadline last month and poised to miss an October target later this week.

“We are just missing two things: What exactly is going to be in the bill and how we’re going to pay for it,” Rep. Brendan Boyle (D-Pa.) said Tuesday. “Other than that, we are good to go.”

The drawn-out negotiations aren’t unique to Biden. The last two first-year presidents saw their major legislative pushes take a very long time to materialize into a law. President Barack Obama didn’t sign the Affordable Care Act until his second year in office, while the 2017 tax law was finished in December of President Donald Trump’s first year.

Josh Wingrove and Kaustuv Basu have more.

Progressives Push for Specifics: Progressives Democrats reiterated Tuesday that they want an agreement on the specifics of a budget reconciliation package, not just a high-level outline, before they will vote for a Senate-passed infrastructure bill.

“A mere framework is not enough,” Rep. Alexandria Ocasio-Cortez (D-N.Y.) said Tuesday. “We need to have a vote ready for the Build Back Better plan, not a framework. We want to have both of these votes together.”

Progressive Caucus Chair Pramila Jayapal (D-Wash.) told reporters that she also wants a bill, not a framework, a stance she said dozens of her colleagues share.

Jarrell Dillard has the story.

Bank Reporting Plan

Sen. Joe Manchin (D-W.Va.) said Tuesday he opposes a proposal to make banks report account information to the IRS to increase tax-paying compliance.

Manchin said he believes “no one should be in anyone’s bank account,” potentially derailing a key, but controversial, component of the White House’s plan to catch tax evaders by monitoring aggregate deposits and withdrawals of amounts $10,000 or more.

Natasha Sarin, deputy assistant secretary for economic policy at Treasury, on Tuesday defended the data reporting plan as a way to better target wealthy individuals who are underpaying taxes on income the IRS has little visibility into.

“Painting a false picture of what this proposal was was an attempt to derail the idea of any information reporting on these opaque income streams,” Sarin said at an event hosted by the Committee for a Responsible Federal Budget.

Allyson Versprille has more.

EV Tax Credit Boost

General Motors Co. President Mark Reuss told reporters Tuesday that Congress should eliminate a cap on tax credits for electric vehicles, while voicing his support for an additional incentive for vehicles made by union workers.

Expanded electric vehicle incentives are expected to be part of the climate portion of the reconciliation package. The climate spending is expected to total more than $500 billion, people familiar with the discussions told Bloomberg Tuesday.

Reuss said Congress should act now to incentivize electric vehicles to help foster adoption of EVs, given growing interest among American car buyers. Reuss’ comments came after he announced that GM would distribute 40,000 electric car charging stations to its dealerships in the U.S. and Canada dealerships.

Read more from Keith Laing.

What to Watch Today

Energy Tax Policy: The Urban-Brookings Tax Policy Center hosts a Wednesday event on the U.S. approach to energy tax policy. The agenda includes a keynote by Catherine Wolfram, deputy assistant secretary of climate and energy economics at Treasury.

Labor Market: The Joint Economic Committee meets for a hearing Wednesday on the labor market.

Covid-19 Response: The House Appropriations State, Foreign Operations, and Related Programs Subcommittee scheduled a Wednesday hearing to examine the U.S. global Covid-19 response, the actions taken, and future needs.

State Tax Conference: Vanderbilt University Law School hosts a conference focused on state and local tax issues, starting on Wednesday. Highlights of the agenda include discussions of pandemic relief and state workarounds to the 2017 tax law’s state and local tax cap.

Beyond the Beltway

EU Corporate Taxes: The European Union plans to publish its roadmap for a 15% global minimum corporate tax rate on Dec. 22, a spokesperson for the European Commission confirmed Tuesday.

The minimum tax is part of a global tax overhaul agreement facilitated by the Organization for Economic Co-operation and Development.

Officials previously said they need a plan for how the EU’s 27 member countries will implement the deal to ensure equal treatment of companies across the bloc. The minimum tax would cover companies with global revenues above 750 million euros, or $872 million.

—With assistance from Allyson Versprille, Joe Stanley-Smith, and Patrick Ambrosio.