House Dems Just Passing Tax Increases On Rich F*ckwads, Redistributing Income Right And Left!
The House Ways and Means Committee passed a package of tax increases on the rich and tax benefits to help working families and renewable energy; the bill will now go to the Budget Committee, where it will be incorporated into the $3.5 trillion (over 10 years) Build Back Better reconciliation bill that Democrats hope to pass by the end of the month. There's some good stuff in here! As we noted yesterday, the tax increases could be more aggressive, especially in taxing the most nauseatingly wealthy Americans, but there's still hope that the tax increases can be toughened up as the bill moves forward.
The tax package passed out of committee on a nearly straight party-line vote of 24-19, with one Democrat, Stephanie Murphy of Florida, voting against it because she thinks the reconciliation package is too expensive overall. Murphy said she supports much of what's likely to be in the final bill, but that she's "optimistic" the final bill will be more "fiscally responsible," so there's her eventual reelection ad we guess.
Let's take a look at what's in this puppy, and what isn't but should be!
Taking From the Greedy
The package would raise a total of $2.1 trillion over 10 years, as estimated by the Joint Committee on Taxation (JCT), which only looked at parts of the bill that directly increase taxation. The bill's sponsors say the rest of the $3.5 trillion cost of Build Back Better would be covered through improved tax collections by the IRS (the bill ups the agency's budget), by savings on prescription drugs for Medicare, and through economic growth spurred by the legislation. Among the revenue enhancers, we've got:
- Increased top corporate tax rate on income above $5 million, from 21 percent to 26.5 percent.
- Increased top individual income tax rate from 37 percent to 39.6 percent (where it was before the 2017 tax cuts).
- Increased top capital gains tax, from 20 percent to 25 percent (Joe Biden had called for a top cap gains rate of 39.6 percent, since the super-rich get most income from investments, not taxable wages).
- A new three percent surtax on individual income above $5 million, which is nice except for that thing where few rich people get wages in that range. But some do.
- The portion of estates that are exempt from the estate tax would go back to its pre-2017 level of $12 million for a married couple; Trump had doubled that to $24 million. It had been set to expire in four years, the bill advances that expiration to the end of 2021.
- Higher taxes on overseas earnings of US companies.
Giving To The Needy
The Ways and Means package also bakes up some of those income redistribution cakes we like; while other committees will be writing legislation for social spending like universal pre-K education, free community college, paid family leave and the like, this bill covers several taxy-spendy items like:
- Extending though 2025 the poverty-reducing expanded child tax credit that started this year, and also permanently making the credit fully refundable. That means families with the lowest incomes will be able to receive the full credit; in the past, the very poorest families, who didn't pay much or anything in federal taxes, couldn't benefit from the credit.
- Making permanent the expanded subsidies for Obamacare health insurance premiums, which were expanded in the American Rescue Plan earlier this year.
- Expanding the low-income housing tax credit.
- Allowing the Department of Health and Human Services to negotiate prescription drug prices (this is a little confusing; another committee yesterday failed to pass that, but it's in the Ways and Means bill. Expect further wrangling).
- Increased funding for the IRS to collect taxes that are going uncollected now.
- Extension of tax credits for renewable energy and zero-emissions vehicles.
As we noted yesterday, Ways and Means wussed out on several measures that could make the super-rich pay a little more of their fair share, like the far lower increase in capital gains taxes than what President Joe Biden had requested. And by Crom, we are going to keep ranting about the need to close the "step up in basis" loophole that allows wealthy people to pass on investments to their heirs without paying anything close to the amount in capital gains taxes that would apply if the assets had been sold before death. Lucky you, we're not going to explain how it works again, since we did that here.
Fortunately, The Hill reports that Senate Finance Committee Chair Ron Wyden (D-Oregon) is still hot to close that loophole in the Senate version of the reconciliation bill, so the idea is far from dead at this point.
Now the tax part of the bill heads to the House Budget Committee, which has the responsibility of stitching together all the parts of the reconciliation package being written by various House committees; once that's done, the full House will do amendments and further tweaking, like deciding whether to roll back the 2017 tax law's $10,000 cap on deductions for state and local taxes, among other things.
Then the Senate does its version, Joe Manchin pouts, and eventually something should get passed, and damned if we know what that'll be, but we'll keep you kids updated as it happens.
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Doktor Zoom's real name is Marty Kelley, and he lives in the wilds of Boise, Idaho. He is not a medical doctor, but does have a real PhD in Rhetoric. You should definitely donate some money to this little mommyblog where he has finally found acceptance and cat pictures. He is on maternity leave until 2033. Here is his Twitter, also. His quest to avoid prolixity is not going so great.