White House, Democrats argue over Biden’s attempt to raise taxes

WASHINGTON – President Joe Biden has a simple message for fellow Democrats about his plan to raise taxes to remake large swathes of the U.S. economy: look beyond the bottom line.

Biden is trying to persuade Democrats to take a more emotional argument that the plan is fair, that it raises taxes on those who can afford to pay more and spends money on programs targeting children and the middle class.

The president has proposed more than $ 3 trillion in revenue increases, mainly through higher taxes for the country’s wealthiest corporations and households, as well as stricter enforcement of the IRS that would target rich. Leading lawmakers expressed doubts last week about the size and possible impacts on the economy as congressional committees reviewed the measures and a wide range of business groups sifted through the details to put highlight what they oppose.

Interviews with three administration officials suggest that the White House is comfortable settling for a lower price as part of the negotiation process, as long as the end result produces a tax system voters deem fair. Officials, who were not authorized to discuss the ongoing negotiations publicly and spoke on condition of anonymity, said Democrats were united on this front.

If the Voter Calling Playbook sounds familiar, it was the same strategy Biden used to cement a bipartisan infrastructure deal earlier this year.

“It’s a common sense thing that people agree with,” said Kate Berner, deputy director of communications for the White House. “They don’t understand why companies can park their profits overseas and not pay taxes. They don’t understand why a hedge fund manager pays a lower tax rate than a pipefitter. It is something that people see as fundamentally broken.

In a sign of uncertainty, the administration has also remained publicly silent about the low level Biden is willing to drop to lighten the package. The administration also finds itself grappling with interest groups the White House sees as intentionally distorting its tax plans in hopes of eroding support. Officials say job loss claims from the US Chamber of Commerce and other groups are exaggerated and ignore investments in family leave, children, child care, care health and environment which they believe will help the economy.

The president outlined his tax plans in his budget proposal, establishing a baseline for congressional committees. Some Democratic lawmakers, including West Virginia Senator Joe Manchin, have already opposed the amount of spending and tax hikes. Manchin raised concerns early on about Biden’s proposal to raise the corporate tax rate from 21% to 28%.

“If you want to be a world leader and the superpower of the world, you better have a competitive tax rate, period,” he said.

While Manchin and Sen. Kyrsten Sinema, D-Arizona, both voted for the budget plan that allowed Democrats to start crafting the social package, they made it clear they would not support the spending figure. proposed $ 3.5 trillion over 10 years. .

“Setting an artificial spending figure of $ 3.5 trillion and then reverse-engineering the partisan social priorities that should be funded is not how you make good policy,” Manchin wrote in The Wall Street Journal.

On the House side, Democrats can afford to lose just three votes and still pass the spending bill if the GOP unanimously opposes it, as expected. There have already been early signs of trouble, with Rep. Stephanie Murphy, D-Fla., Voting against two sections of her party’s bill in a committee hearing last week, and Rep. Ron Kind, D-Wis., Joining her in voting no on one of those votes.

“I don’t know how much we spend, how much we collect, how we spend part of the money and how we collect part of the money,” complained Murphy.

According to Biden’s original proposal, the corporate tax changes would generate around $ 2 trillion over a decade, of which around 70% of that would come from setting the corporate rate to 28% and revising it. a worldwide minimum tax on profits. An additional $ 755 billion would come from an increase in personal taxes on the wealthiest Americans, including an increase in the rate charged on profits from the sale of fixed assets such as stocks or real estate.

An increased enforcement by the IRS would net an estimated $ 460 billion. But a Treasury Department analysis indicates that figure would rise to $ 1.6 trillion over the next decade as more IRS employees were fully trained, one of the main arguments for saying the budget would be fiscally responsible.

Part of the challenge for Democrats is remembering the backlash of voters against proposed tax increases in the 1984 presidential election against Ronald Reagan almost four decades ago.

Many older Democrats and those in more conservative areas fear voters will penalize them if taxes increase too much, even though Biden and advocacy groups support the argument that voters now reject Reaganism and will reward Democrats for having increased taxes on businesses and the wealthy.

“We are in a generational struggle within the Democratic Party,” said Frank Clemente, executive director of the Americans’ Tax Fairness Group. “We are in a very different time, and these Democrats have not caught up to the time we are in.”

Americans for Tax Fairness is among the organizations trying to persuade Democratic lawmakers to support Biden’s tax proposals. The groups commissioned national polls and six state battlefield polls, and mobilized 97 national groups and 620 state organizations to support the plans on the assumption that they are popular.

Although groups of companies oppose parts of the plan, their objections may vary by industry. The Chamber of Commerce underscored its aversion to higher corporate rates and capital gains, while the American Bankers Association on Tuesday sent a letter to lawmakers expressing concerns about increased reporting requirements to the IRS on customer accounts.

The Retail Industry Leaders Association, whose members include Target, Best Buy and other major retailers, urged congressional leaders on Thursday not to raise corporate tax rates, but to strengthen IRS enforcement and to ensure that all businesses pay at least a minimum tax before an increase in the corporate tax rate is taken into account.

“We have a lot of meetings to educate members on this issue and to make sure they understand how a price increase will hurt retail and the importance of making sure all profitable businesses contribute,” said Melissa Murdock, vice president of the business group.

The American Petroleum Institute, the largest trade group representing the United States’ oil and gas industry, is pushing to push back a proposed methane emissions levy that its supporters say would slow climate change and dramatically improve performance. air quality in communities near oil and gas facilities.

The group is running a more than $ 1 million ad campaign that tells energy viewers, “Washington wants to chart an extreme path” that could make energy more expensive and less reliable. “

Senator Bernie Sanders, an independent from Vermont, spoke in the plenary press to reshape or even remove the tax increases.

“You have all of the big financial interests in the country fighting us day in and day out,” Sanders said. “At the end of the day, in my mind, what we’re trying to do is restore the confidence of the American people that their government can work for them, not just for Capitol Hill lobbyists or big money interests. And we will win.

But even as trade groups focus on the individual details of a complex budget, the proposed funding of $ 3.5 trillion in additional spending over the next decade is the biggest hurdle. Neil Bradley, executive vice president and director of policy at the Chamber of Commerce, said the proposed tax increases are unprecedented but also insufficient to pay for all programs while respecting Senate budgeting rules.

“’I’ve been doing this for 25 years,” Bradley said. “Based on this experience, I think a package this size collapses under its own weight.

– By Josh Boak and Kevin Freking

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