Democrats in the House of Representatives want to scale back Joe Biden’s proposed tax increases on corporate income and capital gains, as part of $2.9tn in tax hikes to pay for the US president’s expansion of the social safety net.
The draft tax plan was circulated on Sunday among members of the House Ways and Means committee, which is responsible for tax legislation in the lower chamber of Congress, according to people familiar with the matter.
Under the plan, the US corporate tax rate would rise from its current level of 21 per cent to 26.5 per cent — short of the 28 per cent level proposed by Biden early this year.
House Democrats are also looking to raise the tax paid by investors on capital gains to 25 per cent from the current rate of 20 per cent — significantly lower than Biden’s planned rate of 39.6 per cent, his target for taxes on ordinary income.
However, House Democrats are proposing a 3 per cent surtax on earnings over $5m per year, which would target the very wealthiest American households. Biden had not backed such a surtax.
Despite the changes compared to its own proposal, the White House reacted enthusiastically to the plan.
“[It] makes significant progress towards ensuring our economy rewards work and not just wealth by cutting taxes for middle class families; reforming the tax code to prevent the offshoring of American jobs; and making sure the wealthiest Americans and big corporations pay their fair share,” said Andrew Bates, a White House spokesperson.