Senior House Democrats have drafted a proposal that might be able to get approximately $2.9 trillion to pay for Biden proposed $3.5 trillion package. Although the draft will not follow all the ambitious goals set by President Biden to overturn the 2017 Republican tax law, there has been a lot of work put in by the Democrats to address the concerns set forth by Senator Joe Manchin and other moderates.
The tax proposal was first obtained by the Washington Post. Sources who briefed news outlets said that the proposals are in flux, and they could not confirm whether the draft will be followed through as a whole but mentioned certain reforms in the tax code that would most likely occur, provided all the Democrats in the Senate were on board with the proposal.
The corporate tax is set to increase from 21 percent to 26.5 percent for businesses that have an annual income of over $5 million. Biden had proposed a raise to 28 percent. Business that earn less than $400,000 will pay a lower tax of 18 percent while other businesses will continue to pay 21 percent.
Wealthy Americans who earn over $435,000 could see their tax rate increasing from 37 percent to 39.5 percent.
A five percent increase in capital gains tax has been proposed from the current rate of 20 percent to a new rate of 25 percent. This is a surprise as President Biden had proposed a doubling of capital gains tax.
Taxes on multinationals who shift their base to tax havens might have to pay taxes no matter where they shift their major base to as there is a global push to set minimum tax rates globally.
The draft also looks at increasing the so-called sin taxes. The taxes on tobacco and nicotine will be increased. There will also be a new stream of taxes as cryptocurrency transactions will also be taxed.
All these proposals are currently being discussed and there could be changes according to the sources who provided information as this is only a draft proposal and there could be changes as every Democratic vote in the Senate counts. The Democrats are expecting to finally pass the package on their own, most probably without a single vote from GOP senators. So, they need all their members in the House and especially in the Senate to along with their tax proposals.