Billionaire’s tax and other revenue Democrats want to pay for President Biden’s $ 2 trillion social safety net expansion set to face math test from assessor notoriously difficult: the Joint Committee on Taxation.
Why is this important: The budget reconciliation instructions require the Senate finance committee to offset all spending it authorizes with the same amount of revenue. The hot air of House and Senate leaders on compensation will be replaced by the cold arithmetic of the joint committee – and the outcome is questionable.
In numbers : The increase in the tax rate on corporations, capital gains and high net worth taxpayers opposed by Senator Kyrsten Sinema (D-Arizona) would have generated up to $ 850 billion in new income.
To help compensate for this loss:
- House Speaker Nancy Pelosi estimated that a proposal to tax billionaire cash could increase from $ 200 billion to $ 250 billion over 10 years.
- Imposing a minimum tax on corporate books, which Sinema could also agree to, would recoup an additional $ 150 billion.
- Another costly item, which Sinema had not previously opposed – $ 700 billion in additional revenue from increased IRS enforcement – cannot be officially used to offset Finance Committee expenses under the reconciliation instructions.
What they say : “The JCT is where tax theory meets the reality of rating,” said Eric Ueland, longtime Senate member and former Trump administration official.
- “When it comes to the reconciliation process, JCT will not hand out easy scores to help supplies get through the budget minefield. “
Go back: Last February, the Senate parliamentarian dashed Democratic hopes of including a minimum wage hike in Biden’s $ 1.9 trillion COVID relief bill.
- The JCT – a five-member committee of the House and Senate that works in conjunction with the Senate Parliamentarian and the Congressional Budget Office – is poised to play a similar role now.
- He has the power to effectively reject any proposal that does not match, leaving some senators to sweat it out.
Between the lines: Many of the priorities of Biden’s reconciliation bill – the improved child tax credit, clean energy tax incentives, paid family leave, home care subsidies, and Medicare and Medicaid subsidies – must be reviewed by the finance committee and fully offset by revenue.
- Expenses authorized by other committees are not subject to the same requirement.
- This includes new programs for child care and education reviewed by the Senate Committee on Health, Education, Work and Pensions, or climate provisions going through the Senate Committee on Energy and Pensions. natural resources.
Driving the news: Biden reiterated his goal on Monday to fully offset all new spending.
- “We pay for everything,” he said in New Jersey. “It doesn’t increase the deficit by a single penny.
Some House centrists, like Rep. Kurt Schrader (D-Ore.), who had previously indicated he could oppose the entire reconciliation plan, now supports around $ 1.5 trillion in new spending – “as long as he’s fully paid,” he said .
- “I am very concerned about the level of spending that we have made,” he told Axios. “I’m actually pretty agnostic about the source of income.”