The House proposal would take huge steps to reverse the 2017 Republican tax cuts. It would hike the corporate rate to 26.5%, after the GOP slashed it to 21% from 35%. Democrats would also restore the top individual rate to 39.6% after Republicans cut it to 37%.That rate of 39.6% would kick in around $400,000 of income for single filers and $450,000 for joint filers, and jumps to 42.6% on all income past $5 million. There's also an increase in the long-term capital gains rate to 25%, which is still well below the tax a lot of Americans have to pay for actual work (and FICA taxes aren't taken out of cap gains), but it at least starts to narrow the gap a bit. But that high corporate rate only hits for businesses that have large incomes. There's actually a tax break from the current 21% rate for corporations that have small profits, and many corporations would still have their rates remain at the lower levels under the GOP Tax Scam.
Under the House Democratic plan, the top corporate rate would apply to income above $5 million. The first $400,000 in income would be taxed at an 18% rate. A 21% rate would apply to corporate income between $400,000 and $5 million.Seems a bit friendly to me, but I'd imagine this would still be a net positive for revenue and increase competitiveness for small businesses. A bigger revenue generator would likely come from adding tax enforcement agents to try to get more of the $1 trillion in taxes that aren't collected due to tax-avoidance schemes.
The plan would invest nearly $79 billion in IRS tax enforcement to increase revenue raised.This would seem to be a no-brainer for anyone who's not a Koch-sucking sellout. Adding revenue agents has been extremely effective in Wisconsin, with a payback estimated at 38 to 1, and there are much bigger kahunas to nab/settle up with in the rest of the country (as well as international tax-dodgers). We haven't seen a score on these tax proposals as of yet, and how much of the $350 billion a year in added spending is covered by those moves. We also haven't seen what's going to happen with the cap on deductions for State and Local taxes (SALT), a move in the 2017 GOP Tax Scam that hamered people in big cities in blue states, and is something that has been a target of change by many Dems that got elected from higher-income suburbs in those areas. The SALT Cap stops write-offs at $10,000 for the combined total of state taxes (usually income taxes) and local taxes (often property taxes but some other ones, depending on where you live). And you can see that many Wisconsinites around the 2 largest metro areas were susceptible to the SALT Cap. as Coastal Dems (especially) have threatened to hold up the whole thing until the SALT Cap is dealt with.
Last Friday, the House Ways and Means Committee unveiled its proposal for tax reform and it did not include a decision repealing the SALT caps. In response, committee chairman Richard Neal, D-Mass., and three other congressmen from New York and New Jersey shared a joint statement on Monday to make clear their commitment to pushing for SALT relief. "With Speaker Pelosi, we continue to work among our colleagues and the Senate to undo the shortsighted capping of SALT by Republicans," they wrote. "We are committed to enacting a law that will include meaningful SALT relief that is so essential to our middle-class communities and we are working daily toward that goal.”... In a sign of frustration from the party’s moderate wing, Rep. Tom Suozzi, D-N.Y., warned Monday that he was set to reject the spending bill if there was no SALT relief included, and he made his position clear to congressional leaders. “I have been consistent for six months. No SALT, no deal,” Suozzi said in a statement.This has led to pushback from other Dems in Congress, although one prominent member seems to have moved off of her previous position of saying any type of removal of the SALT Cap was a disgrace.
AOC's main point about regressiveness is true - if the SALT Cap was removed entirely, it would give a sizable break to the upper-middle class and upper classes. The Tax Foundation came out with this chart showing the effects under the Biden/Dem plans, which notes that while the richest Americans would still pay more taxes, the hike would be a lot less with a full repeal of SALT.
I am open to taking a look at SALT and addressing concerns for families put under the squeeze in high cost of living areas.— Alexandria Ocasio-Cortez (@AOC) September 17, 2021
But a full 100% SALT repeal means major tax breaks for extremely high-net worth individuals and billionaires. Why do that? 🙅🏽♀️