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Democrats attempt tricky fiscal maneuvers for $ 3.5 trillion bill

House Democrats have started serious work to try and implement President Joe Biden’s sweeping spending plan, but getting there will require remarkable legislative agility, as Biden said the revenue to be paid must come from only Americans who earn more than $ 400,000 a year.

Republicans, who have sworn outright opposition to the plan, have turned their anger at the proposed tax breaks which they have described as subsidies for the wealthy elites rather than aid for the poor and the middle class. Electric vehicles became a symbol of rallying as overtones of class war echoed during a committee session.

Democrats propose that the top tax rate drop to 39.6% for people earning more than $ 400,000 – or $ 450,000 for couples – in addition to a 3% surtax on most Americans. wealthy whose adjusted income exceeds $ 5 million per year. For large businesses, the proposal would lower the corporate tax rate from 21% to 26.5% on annual business income above $ 5 million.

“Look, I don’t want to punish anyone’s success, but the rich have had a free ride at the expense of the middle class for too long,” Biden tweeted Tuesday. “I intend to push through one of the biggest tax cuts ever for the middle class – paid for by making the people at the top pay their fair share. “

The scope of the income of the rich was even on display at the ultra-chic Met Gala in Manhattan on Monday night. Representative Alexandria Ocasio-Cortez, DN.Y., one of the House’s main progressives, wore a white dress with “Tax the Rich” in giant red letters engraved on the back (designer Aurora James).

For middle- and low-income people, tax assistance, not an increase, is offered as the House Ways and Means Committee examines debate and drafting tax proposals to fund and support the ambitious plan. Biden’s $ 3.5 trillion reconstruction program that includes spending on child care, health care, education and climate change.

It’s an opening offer at an intimidating time for Biden and his allies in Congress as they put together the “Build Back Better” package considered by some to be comparable to the Great Society of the 1960s or even the New Deal of the United States. 1930s depression.

The proposals call for $ 273 billion in tax breaks for renewables and “clean” electricity, including $ 42 billion for electric vehicles and $ 15 billion for a “green workforce” and components. environmental. The child tax credit increases to $ 300 per month per child under 6 and to $ 250 per month per child 6 to 17, which entered into coronavirus relief legislation earlier this year, would be extended until 2025.

The House Energy and Commerce Committee, meanwhile, has put forward proposals promoting clean electricity, investments in electric vehicles and other climate provisions. The 30-27 party line vote pushes energy measure forward as part of House Speaker Nancy Pelosi’s goal of approving the massive global package.

The $ 456 billion slice of the energy panel is the largest for tackling climate change and greenhouse gas emissions, along with the tax breaks debated by the Ways and Means Committee.

The Democratic proposals would invest $ 150 billion in subsidies to encourage utilities to provide “clean electricity” from renewable sources such as wind and solar. Electricity providers would receive subsidies based on the amount of clean electricity they deliver, as part of Biden’s plan to stop climate-damaging fossil fuel emissions from U.S. power plants by 2035.

All GOP lawmakers should vote against the comprehensive legislation. But Republicans are largely sidelined as Democrats rely on a budget process that will allow them to approve the proposals themselves – if they can muster their slight majority in Congress.

Democrats have no voice to spare in adopting Biden’s platform, with their weak grip on the House and with the Senate split 50-50, with Vice President Kamala Harris as the tiebreaker, if he doesn’t there is no Republican support.

But a Democratic senator vital to the bill’s fate, Joe Manchin of West Virginia, says the cost will have to be reduced from $ 1,000 billion to $ 1.5 trillion to win his support. Manchin also said he would not support a number of clean energy and climate provisions proposed by Democrats.

A day earlier, Biden appeared to respond to concerns about the size of the plan, saying the cost “could rise” to as high as $ 3.5 trillion and would be spread over 10 years as the economy grows.

Republican lawmakers, who denounced the Democratic spending plan as socialist and job destructive, also spoke out in favor of the proposed tax breaks on Tuesday.

Democrats are proposing to extend the current $ 7,500 electric vehicle tax credit to five years, with an additional $ 4,500 if a car is made by union workers and an additional $ 500 for a US-made battery. United. But Republicans have painted electric vehicles as a taxpayer-subsidized bourgeois-bohemian accessory, the latest symbol of excess.

Speaking of outrageous green welfare, this bill allows a near-millionaire family to buy a $ 75,000 Beamer, Jaguar or Benz luxury electric vehicle – and their maid is forced to send them a grant of $ 12,500 in taxes, “said Rep. Kevin Brady of Texas, the panel’s top Republican. “Why are blue collar workers, nurses, teachers and firefighters subsidizing the rich and big business with a quarter of a trillion dollars in green social checks? “

Wait, said Rep Dan Kildee, D-Mich. “We are not going to subsidize the richest who buy luxury vehicles. The legislation places caps on the vehicle’s selling price ($ 55,000 for a sedan) and the buyer’s income ($ 600,000 of adjusted gross income for a head of household.)

The proposal touches another nerve for Republicans – Democrats’ support for unions – by adding incentives for vehicles and batteries made by unionized workers.

As they trudged through the legislation, members of the majority Democratic committee rejected a series of Republican amendments aimed at tightening credit limits for electric vehicles and eliminating other tax breaks denounced as going against the grain. of the “Green New Deal” proposed by the progressive democrats.

The House tax proposal is touted as potentially raising some $ 2.9 trillion – a preliminary estimate – which would go a long way towards paying for the $ 3.5 trillion legislation. The White House is counting on the long-term economic growth of the spending plan to generate an additional $ 600 billion to make up the difference.

To meet the Democrats’ goal, much of the income generated would come from increasing corporate taxes and higher incomes, raising the personal tax rate to 39.6% from the current 37%.

Targeting high net worth individuals, Democrats are proposing an increase in the top capital gains tax rate for those earning $ 400,000 a year or more, to 25% from the current 20%. Inheritance tax exemptions, which were doubled under a 2017 Republican tax law, to $ 11.7 million for individuals, would come down to $ 5 million.


Associated Press writer Matthew Daly contributed to this report.

The Independent Gt

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