Sinema Throws a Monkey Wrench Into Tax Hike Machinery
Democrats are scrambling to find Alternative Tax Measures now that Senator Sinema comes out firmly against top marginal rates.
Democrats worked to quickly find new sources of revenue to pay for their roughly $2 trillion social-policy and climate package, seeking to target businesses and wealthy individuals in novel ways after proposed rate increases ran aground in talks.
The continued opposition by Sen. Kyrsten Sinema (D., Ariz.) to any increases in top marginal rates on corporations, individuals or capital gains has emerged as a major hurdle in the party’s quest to reach a new framework on the legislation.
But some of the alternatives Democrats are weighing, such as annually taxing billionaires’ unrealized capital gains, face their own dose of skepticism from other centrist Democrats.
Rep. Richard Neal (D., Mass.), the chairman of the Ways and Means Committee, also met with Ms. Sinema. He said she indicated support for an expanded child tax credit, paid leave, and clean-energy incentives, and he said they discussed the alternative tax options.
In the House, Democrats have proposed raising the corporate tax rate to 26.5% from 21%, moving the top individual rate to 39.6% from 37% and increasing the top capital-gains rate to 28.8% from 23.8%. The corporate rate increase was projected to raise $540 billion over a decade, while the tax rate increases on ordinary income and capital gains would raise nearly $300 billion.
Ideas previously not part of Democrats’ tax plans like an excise tax on stock buybacks have gained new ground in recent days. Democrats could also explore a form of corporate alternative minimum tax, a levy designed to raise taxes on companies that are paying low rates now because of legal use of tax breaks.
One of the leading alternative ideas for raising revenue comes from Sen. Ron Wyden (D., Ore.), the chairman of the Senate Finance Committee. The plan aims to redefine longstanding rules for how capital gains are taxed—for the people at the very top of the wealth distribution.
Mr. Wyden’s plan, by contrast, would tax those unrealized gains annually during life, but apply the levy only to a few hundred billionaires.
Roughly $2 Trillion Package
I keep wondering about the phrase "roughly $2 trillion".
Senator Joe Manchin says he is only willing to spend $1.5 trillion no matter how big the tax hikes.
And while Sinema supports a broad set of climate change proposals, Senator Manchin doesn't.
Perhaps Sinema will go along with Wyden's idea. But what about Manchin? More importantly, Sen. Jon Tester (D., Mont.) says he won't.
Amusingly, Sinema's position isn't even a new one. She has not changed her stance. Nor has Manchin.
Yet the progressives keep tabling ideas that cannot pass.
I suspect Progressives thought they could hound Sinema and Manchin into submission.
Excuse me for pointing out that Sinema represents all of Arizona, not progressives.
Note the threat of Trumpian politics in the video: finding someone extreme to run against her.
If so, the likely consequence of scorched politics would be to send the seat back to Republicans.
What About Infrastructure?
Progressives keep saying they will not support the infrastructure package unless and until the budget reconciliation package passes first.
Moreover, the Progressives want to solve the funding aspect with shorter durations while Manchin wants to solve it with fewer programs.
On October 2, House Speaker Nancy Pelosi Shifted the Deadline for passing the infrastructure bill from September 30 to October 31 in a letter to Democrats entitled Dear Colleague: It's About Time!
Pelosi started 5 paragraphs with the words "It's about time!"
Also, Biden also downscaled his Build Back Better plan to a range between $1.9 trillion and $2.3 trillion.
But Biden tossed those numbers around without an agreement from Manchin.
What's Not Settled?
- Overall price
- Funding methods
- Duration of programs
- Number of programs
- Climate change
- Whether infrastructure can pass without social agenda
Meanwhile, the merry-go-round is still spinning.
As noted on October 19, Biden's Merry-Go-Round Meetings For Build Back Better Take Another Spin Today.
Biden's Merry-Go-Round Process
- Meet with Manchin
- Meet with Sinema
- Meet with key Progressives
- Meet with groups of Progressives
- Return to step one
I commented "It would seem to me that at some point Biden might think of trying something different such as meeting with Manchin and Sinema together."
The best outcome would be to scrap it all and declare victory because whatever these Progressives pass is sure not to be any good for the nation.
Unfortunately, I expect the Democrats to pass something. I hope I am wrong,
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