Top earning New Yorkers and Californians could face 60% combined tax rate and corporate tax would be raised to 26.5% under House Democrats' bill to fund $3.5trillion spending plans
House Democrats unveiled proposals on Monday to pay for a $3.5 trillion spending plan, with tax increases that could mean the wealthiest New Yorkers and Californians face rates of about 60 percent.
The plans represent a rollback of Donald Trump's tax cuts and include a three percent surtax on individuals who earn more than $5million as well as increases in capital gains tax and a corporate tax hike from 21 percent to 26.5 percent for the biggest companies.
The proposals are part of a tax raid to fund aggressive spending on infrastructure, climate change, social care, education and President Biden's other domestic priorities.
The result is a top marginal federal income tax rate of 46.4% for wealthy New Yorkers, according to analysis by CNBC, which taken with a top marginal state and city tax rate is 14.8%, gives a combined rate of 61.2 percent.
In California the figure is 59.7 percent.
House Republicans quickly condemned the plans.
'The cost of living is skyrocketing for American families,' they said.
'What are House Democrats doing about it? They are attempting to pass "the biggest tax increase in decades."'
House Democrats led by Nancy Pelosi moved a step closer to plans for a massive round of spending plans as the House Ways and Means Committed unveiled legislation for a tax raid to help pay for President Biden's domestic agenda
The House Ways and Means Committee published plans on Monday to pay for Democrats' $3.5 trillion in social spending priorities, including raising the corporate tax rate to 26.5 percent
The tax plans are part of proposals for President Biden's domestic spending priorities, that will invest in rebuilding infrastructure, tackling climate change, education, social care
The proposals could raise as much as $2.9 trillion.
Democratic leaders want to move fast. They have set a soft deadline of Wednesday for Senate committees to finish drafting different parts of the bill and want to pass the finished legislation in the House by the end of the month.
They are under pressure to move it in tandem with a $1 trillion bipartisan infrastructure bill that is awaiting a vote in the House.
Monday's legislation, unveiled by the House Ways and Means Committee, increases the top capital gains rate from 20 percent to 25 percent.
The tax-writing panel has scheduled work sessions for Tuesday and Wednesday to debate tax policy and other matters under its jurisdiction to be included in the $3.5 trillion 'reconciliation' bill.
Individuals who earn over $400,000 will receive a top tax rate of 39.6 per cent while married couples taking in more than $450,000 together will also be taxed at the same rate.
The capital gains increase, which taxes profits from assets, will target those earning above $400,000 despite the White House previously saying it would only apply to those earning more than $1million a year.
The corporate tax increase will apply to companies reporting more than $5million in income. The increase will be accompanied by a cut to 18 percent for small business making less than $400,000 and will stay at 21 percent for all others.
In a statement, the committee said that in addition to raising corporate taxes, it will include a provision in its bill to 'level the playing field by cutting taxes for our nation's smallest businesses.'
Rep. Richard Neal, committee chairman, said: 'Our proposals allow us to both address our perilously changing climate and create new, good jobs, all while strengthening the economy and reinvigorating local communities.'
Currently, the federal tax rate on corporations is 21 percent, down from 35 percent prior to the 2017 Republican tax cut law.
President Joe Biden had proposed raising the current rate to 28 percent.
Republicans and conservatives were quick to condemn the proposals at a time when many Americans already face rising prices
The White House offered praise for the committee's ideas.
'This meets two core goals the president laid out at the beginning of this process—it does not raise taxes on Americans earning under $400,000 and it repeals the core elements of the Trump tax giveaways for the wealthy and corporations that have done nothing to strengthen our country's economic health,' White House spokesman Andrew Bates told the Wall Street Journal as details started to emerge.
Biden and his congressional allies must negotiate a paper-thin majority if they are to steer their plans into law.
Sen. Joe Manchin, a moderate Democrat, on Sunday said wide differences between his position and liberal Democrats would likely mean House Speaker Nancy Pelosi D-would miss her late September goat.
'I cannot support $3.5 trillion,' he said, laying out his opposition to Biden's 28 percent proposal.
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