Democratic leaders have proposed reversing some of former US President Donald Trump’s tax cuts.
Members of the influential Ways and Means Committee, which sets tax policy, suggest increasing the highest corporate tax rate from 21% to 26.5 percent.
Rich people would face greater income taxes, as well as increased capital gains and inheritance taxes.
The ideas would help pay the Democrats’ $3.5 trillion domestic investment package, which will be debated this week.
Currently, there isn’t a single Republican in Congress who supports the measure, which would fund a massive increase of social services for the elderly and children while also addressing climate change.
Republicans under Mr. Trump reduced the top corporation tax rate from 35% to 15% in 2017, claiming it would stimulate economic development and generate employment.
Democrats, on the other hand, argue that the tax cuts favored the wealthiest and only offered a temporary boost to the US economy.
Their plans would only partially reverse Mr Trump’s corporate tax cuts, introducing a progressive rate of 18% on yearly income below $400,000, 21% on income up to $5 million, and 26.5 percent on income beyond $5 million.
For businesses with revenues above $10 million, the progressive rate advantage would be phased off.
Inheritance Tax Under The Micro-Scope
Their ideas for individual taxation, on the other hand, would restore the top rate to its pre-2017 level, from 37 percent to 39.6 percent. Individuals with taxable income of more than $400,000 and married couples with income of more than $450,000 would be affected.
Planned increases in the inheritance tax have been criticized by Republicans. They raised the payment threshold to £24 million in 2017, but Democrats want to reverse this four years sooner, in 2021 rather than 2025.
They also intend to raise the capital gains tax on assets like stocks and bonds from 20% to 25% for people with earnings over $400,000, up from 20% now. Taxable income beyond $5 million would be subject to an extra 3% surcharge.
The proposals aim to collect $2.9 billion over ten years to help pay the $3.5 billion “reconciliation” measure, which requires only a simple majority in the Senate to succeed.
House Speaker Nancy Pelosi hopes to put the plan up for a vote in the Democratic-controlled House by the end of the month, but the final version likely be trimmed back to earn the backing of moderate Democrats in the Senate, where Democrats have 50 of the 100 seats.
When a tie is reached, Democratic Vice President Kamala Harris votes to break the tie.
Democrats suggest utilizing the US tax system to stimulate the building of additional low-income housing, as well as large tax credits for the purchase of electric vehicles, in addition to boosting taxes.
The plan would also include a measure to “level the playing field by lowering taxes on our nation’s smallest companies,” according to committee Democrats.