Lawmakers are racing to finalize legislation to pay for new spending initiatives. The process usually takes months, but they are trying to do it in days.
As they hunt for revenue to pay for their sprawling spending bill and try to unite a fractured caucus, Democrats are attempting to rewrite the United States tax code in a matter of days, proposing the kind of sweeping changes to how America taxes businesses and individuals that would normally take months or years to enact. The effort has effectively discarded trillions of dollars of carefully crafted tax increases that President Biden proposed on the campaign trail and that top Democrats have rolled out in Congress. Instead, lawmakers are throwing a slew of new proposals into the mix, including a tax on billionaires, hoping that they can pass muster both legally and within their own party. The frantic attempt to overhaul the complex U.S. tax code remained in a state of flux on Wednesday, with Senator Joe Manchin III and some House Democrats expressing reservations about a tax on billionaires that was proposed earlier in the day by Senator Ron Wyden of Oregon. On Tuesday, Mr. Manchin shot down a plan that would have given the Internal Revenue Service more visibility into certain taxpayers’ bank accounts in order to catch tax cheats, forcing a group of Senate Democrats who support the provision to try to negotiate a compromise. Mr. Manchin’s opposition to a new federal paid leave program also appeared to doom its chances of being included in the final legislation, although supporters of the provision said they would fight to keep it intact. Senator Mark Warner, a Virginia Democrat, acknowledged on Wednesday that the rapid pace of the legislative process posed risks and said it would be preferable to “allow some of this very, very complicated tax policy to get an appropriate airing back and forth.” The need to roll out new tax proposals stems largely from the concerns of business groups — and moderate Democrats — who effectively killed Mr. Biden’s initial plan to raise the corporate tax rate to 28 percent from 21 percent to pay for his clean energy and social policy initiatives. Other ideas proposed by the White House, including raising the top marginal rate for the wealthiest taxpayers and doubling the capital gains tax, have also been jettisoned. The new policy proposals include elements of the kind of wealth tax that Mr. Biden shied away from during his campaign in favor of other tax increases. Under the new plan, billionaires, who often pay little to nothing in federal income taxes, would have to pay taxes on the increased value of certain liquid assets, like stocks and bonds, even if those assets were not sold and the gains were not realized. A second proposal, which Mr. Biden has supported in the past, would impose a 15 percent tax on companies that report at least $1 billion in profits to shareholders but have little or no federal tax liability as a result of tax deductions and other loopholes. If enacted, the taxes would likely apply to fewer than 1,000 companies and individuals. But the breakneck speed at which changes are being considered and crafted is rattling business groups and some powerful Democrats, who have expressed concern about the consequences of moving so quickly. “We’re quite concerned that Congress is contemplating really fundamental shifts in tax policy with very little time for any vetting for unintended impact and consequences,” said Neil Bradley, chief policy officer at the U.
