Senate Finance Chair Ron Wyden said committee Democrats left a meeting on next year’s tax battle aligned on the need for wealthy individuals and multinational corporations to pay more in taxes.
Wyden, D-Ore., said he would work with other Democrats on the panel to come up with a “menu” of possible revenue raisers, as preparations heat up for next year’s expiration of many provisions in the 2017 tax law. It’s the same approach Wyden used ahead of what became the 2022 health care and clean energy budget law.
“The menu means that we’re doing our homework. We’re coming up with smart, cost-effective ways to close loopholes,” Wyden said Thursday. “Make no mistake about it, when we do, we’re going to look at ways to get that help to areas that really need it, like housing and child care, and billionaires and multinational companies are going to pay their fair share.”
Wyden name-checked his bill, which would require billionaires or those with at least $100 million in income for three consecutive years to pay taxes on unrealized gains. The policy would raise $557 billion over ten years, according to a 2021 analysis by the Joint Committee on Taxation provided to Wyden’s staff.
President Joe Biden proposed his own version of a “billionaires” minimum tax, though it would start to phase in for those with at least $100 million. Biden’s proposal would impose a 25 percent minimum tax on billionaires and, like Wyden’s plan, tax unrealized gains.
The Supreme Court on Thursday upheld a provision of the 2017 tax law that imposed a one-time tax on corporate earnings held overseas, rejecting in a narrow decision the argument put forward by plaintiffs Charles and Kathleen Moore that the tax applied to unrealized gains and thus was not an income tax.
[Supreme Court upholds 2017 tax on foreign corporation earnings]
Justice Brett M. Kavanaugh said in the majority opinion that the court’s decision did not address the constitutionality of whether income must be “realized” to to be taxed as income. Wyden has maintained that his proposal is on firm legal ground, as other parts of the tax code rely on “mark-to-market” treatment of assets to account for their current market value, rather than waiting until the sale of an asset to tax any capital gains.
Biden also proposed increasing the 21 percent corporate rate made permanent under the 2017 law to 28 percent. Before 2017, the corporate rate was 35 percent.
Many of the revenue-raising proposals were in the mix in 2021 as Democrats worked on what became the narrower clean energy and health care budget law, but did not get adequate support within the party. Sens. Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, now both independents who acted as a check on Democrats’ ambitions, are not running for reelection, which could give some recycled proposals new life if Democrats hold onto the Senate.
Wyden said he would also work with colleagues on using increased revenue to help working families, adding that he expects housing to be a “sleeper issue.” The country had a shortfall of 3.8 million homes in 2020, the most recent estimate from Freddie Mac.
“We’ve addressed some housing concerns with low-income housing tax credits. We’re going to really build on that,” Wyden said. “Everywhere I go, elected officials tell me at the top of their list is housing.”
$400,000 pledge
Wyden sought to contrast Democrats’ positions to Republicans, who have said they’d like to see the expiring provisions extended. GOP leadership is starting to formulate a plan for a reconciliation package that would bypass the need for 60 votes in the Senate in the event of a GOP sweep in November’s elections.
“The American people deserve better than a Trump tax bill that drives up inflation, and it drives up inflation because it basically gives breaks on all these billionaires, and we have a very different kind of approach,” Wyden said. “The Senate Republicans have already made it very clear. I’ve looked at their statements, that they’re gonna go it alone, they’re gonna make no bones about it.”
Individual tax breaks, the treatment of money U.S. corporations make abroad and small-business deductions are set to expire at the end of next year. While the individual tax breaks included in the 2017 law lowered the rates for the wealthy, rates also dropped for the middle and working classes. The law nearly doubled the standard deduction and increased the maximum child tax credit.
That means that at least some of the individual tax breaks from 2017 will have to be extended, if Biden is to keep his pledge to avoid raising taxes on those making less than $400,000.
Wyden said he would honor Biden’s pledge, but at least one Democrat leaving the meeting was noncommittal on that issue.
“We’re going to have a lot of decisions to make about extending cuts or not. We haven’t made decisions about that yet,” Sen. Bob Casey, D-Pa., said of the president’s $400,000 campaign pledge.
Sen. Elizabeth Warren, D-Mass., at a speech at the Washington Center for Equitable Growth earlier this week, said Democrats should walk away from any tax deal next year that doesn’t raise taxes on the wealthy and corporations.
“Better to let all the Trump tax cuts expire than be accomplices to another slash-and-burn tax bonanza for America’s billionaires,” she said Monday.
David Lerman contributed to this report.
