The House Ways and Means Committee has released legislation on Monday to pay for Democrats’ $3.5 trillion in social spending priorities. This includes increasing corporate income tax up to 26.5 percent, a report said.
This legislation provides a range of tax increases aimed at wealthy individuals and companies. It will increase top earners’ capital gains tax rate by 20 to 25 percent, increase the individual tax rate from 37 to 39.6 percent, and add a surtax of 3 percent for individuals’ income over $5 million.
It is a part of a broad bill that provides for taxes and expenditures in childcare, health care, and renewable energy. The Ways and Means Committee started looking at its piece of the bill on Monday and will continue on Tuesday and Wednesday.
The proposed highest corporate tax rate of 26.5 percent is more than that of the 25 percent favored by conservative Democratic Senator Joe Manchin (D-W.Va.). However, it is still lower than the 28 percent rate that Biden had suggested.
Democrats propose to replace the flat corporate tax rate currently set at 21 percent with the structure of a graduated corporate rate. The first $400,000 of corporate earnings will be taxed at 18 percent. The income between $400,000 to $5 million would be taxed at 21 percent, and earnings above $5 million would be taxed at 26.5 percent.
The bill doesn’t address the cap of $10,000 for the local and state tax deduction that was enacted through the 2017 GOP tax bill. Many lawmakers from states with high tax rates like New York, New Jersey, and California seek to eliminate the cap, but a few progressive lawmakers have expressed an objection.