Congress

Democrats Consider Lower Taxes for Lower Spending

SK Ashby
Written by SK Ashby

If the final reconciliation spending bill ends up totaling closer $2 trillion rather than $3.5 trillion, that means Democrats in Congress will not have to raise or impose as many new taxes to pay for it.

To that end, Politico reports that congressional Democrats are in discussions about which taxes they should keep and which ones to drop to pay for a smaller spending package.

Right now, it looks like similarities between Senator Joe Manchin's proposal and policies already passed by Democrats on the House Ways and Means Committee have the most likely chance of making it into a final bill.

Manchin wants to raise the corporate rate to 25 percent, which would generate around $400 billion (Ways and Means wants a 26.5 percent rate, which would produce about $540 billion).

Both Manchin and Ways and Means would hike the top capital gains rate to 25 percent, producing another $125 billion. Restoring the top marginal income tax rate to 39.6 percent, where it was before Republicans’ 2017 tax cuts, would produce around $170 billion.

Improving tax compliance, by beefing up the IRS, could mean $200 billion in savings.

Raising revenue by increasing traditional taxes that are already in place could mean we won't see new taxes on things like capital gains, but I don't think that's necessarily a problem as long as it means a spending bill will actually reach President Biden's desk.

I believe we should impose new taxes on the wealthiest Americans and their Olympic-size swimming pools of passive income they can leisurely dive into like Scrooge McDuck, but if trying to do that would prevent passage then it's not worth it. Too many people and communities in need stand to gain from a second infrastructure bill to derail it for ideological reasons.

There are some more liberal Democrats who apparently would rather pass nothing than compromise because they believe wealthy Americans are an inherently unethical people, but I am not among them. I believe taxes should be increased to pay for policies we need, but not out of spite for wealthy American as a class. Spiteful politics are unhealthy and self-defeating.