Democrats were forced to shift to the unorthodox plan in the
face of opposition from one of their own senators, Kyrsten
Sinema, to raising the corporate tax rate and the top personal
income tax rate to pay for the hefty spending plan, which is a
pillar of Democratic President Joe Biden's domestic agenda.
The party is putting together the final details of the plan,
which is likely to come in at between $1.5 trillion and $2
trillion.
The progressive wing of the party had wanted a much bigger plan,
but opposition from Sinema and fellow Democratic Senator Joe
Manchin required the White House to make concessions and cut the
overall cost.
Democrats have argued for higher income and corporate tax rates
for years, saying wealthy Americans and companies should pay
more to fund new social benefits, but their struggle to enact
such measures underscores the challenges the party faces.
Currently, rich Americans do not have to pay taxes on their
accumulations of wealth, such as real estate, stocks and
artwork, because they are taxed only when an asset is sold.
Under the “Billionaire 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,
regardless of whether they sell those assets.
They could also take deductions for any annual loss in value of
those assets.
The plan has the backing of the White House.
U.S. Treasury Secretary Janet Yellen on Sunday rejected calling
the measure a "wealth tax."
"It's not a wealth tax, but a tax on unrealized capital gains of
exceptionally wealthy individuals," Yellen said during an
interview on CNN.
Critics of the plan say it will force billionaires to retreat
from the stock market, where valuating assets is easier, and
into more opaque markets such as real estate and art.
House of Representatives Speaker Nancy Pelosi said on Sunday the
plan has plenty of appeal but that it may only bring in $200
billion to $250 billion, requiring fellow Democrats to rely on
other revenue raisers to fully pay for their plan.
"The billionaires tax ... has an appeal, but it doesn't produce
that much money," she told CNN.
Pelosi said lawmakers have an array of other options to fund the
spending bill even without the corporate tax rate hike,
including better tax enforcement and international tax
harmonization.
Biden administration officials have said they are confident
Congress will approve legislation to implement a global
corporate minimum tax agreed to by 136 countries.
(Reporting by Jarrett Renshaw; Editing by Peter Cooney)
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