Tag Archives: raising taxes

U.S. senators pursue infrastructure plan without tax hikes

By David Morgan and Susan Cornwell

WASHINGTON (Reuters) -A bipartisan group of 10 senators is trying to build support for a new infrastructure plan to revitalize U.S. roads and bridges without raising taxes, three lawmakers said on Wednesday, a day after President Joe Biden rejected a separate Republican proposal.

Revamping America’s infrastructure is a high priority for Biden, but his proposal has run into trouble in a Congress only narrowly controlled by his fellow Democrats, making Republican support pivotal.

Republican Senator Mitt Romney told reporters that members of the group have reached “tentative conclusions” on their plan. It is expected to total nearly $900 billion. Biden had been pushing for a much higher figure, initially $2.3 trillion, but later lowered to $1.7 trillion.

“We’re not raising taxes,” Romney told reporters. “We’re going to be talking to other members to see if this can get enough support for this to have the necessary votes to be successful.”

The group includes Republicans Romney, Rob Portman, Bill Cassidy, Susan Collins and Lisa Murkowski and Democrats Kyrsten Sinema, Jon Tester, Joe Manchin, Mark Warner and Jeanne Shaheen.

“Taxes would be a huge mistake and I think the Biden administration understands that,” Portman said.

Biden has proposed raising taxes on U.S. corporations to help fund a sweeping package that would address traditional infrastructure projects as well as climate change and social programs. Republicans have shown no appetite for tax increases, having strongly backed a 2017 tax cut law signed by former President Donald Trump.

Tester said he would be willing to look at funding an infrastructure plan without raising taxes.

“I would consider it, sure,” Tester said. “I think there’s plenty of pots of money out there – hopefully they’re not all smoke and mirrors.”

Romney and Portman said members of the group have not settled on a total amount of infrastructure spending and declined to discuss specific provisions they would pursue.

“If we get good support, when we get that support, is when we’d talk about it, bring it out. If we don’t get the support, why, it’ll be closed down,” Romney said.

Portman said the group is looking at funding mechanisms for their proposal that could face Democratic resistance including unspecified user fees and tapping into funds for COVID-19 pandemic-related unemployment payments to individuals that some states have returned to the U.S. Treasury.

“I think the White House is interested in talking with us about appropriate ways to look at some COVID funding that’s being sent back,” Portman said.

Cassidy said he spoke to Biden by telephone on Tuesday to discuss infrastructure.

Most legislation requires 60 votes in the 100-seat Senate to move forward. The Senate is divided 50-50, with Democrats in control because Vice President Kamala Harris can cast a tie-breaking vote.

Biden broke off talks on Tuesday with Republican Senator Shelley Moore Capito, who had headed a six-member Republican team including party leaders and top members of relevant Senate committees.

Capito had offered Biden $330 billion in new infrastructure spending, far short of what he has sought.

The 10 senators now working on a new plan are part of a larger 20-member bipartisan group, known as the G-20, that includes Capito. Portman said he would continue to work closely with Capito and her team.

(Reporting by David Morgan; additional reporting by Susan Cornwell; Editing by Scott Malone and Chizu Nomiyama)

Biden to propose hike in capital gains taxes to pay for more child care: sources

By Jarrett Renshaw and Trevor Hunnicutt

WASHINGTON (Reuters) – U.S. President Joe Biden next week will propose raising taxes on the wealthy to fund about $1 trillion in investments in child care, universal pre-kindergarten education and paid leave for workers, sources familiar with the plan said.

Biden’s proposal calls for increasing the marginal income tax rate to 39.6% from 37%, and nearly doubling taxes on capital gains to 39.6% for people earning more than $1 million, according to the sources.

White House Press Secretary Jen Psaki said the president would discuss his “American Families Plan” during an address to Congress next week, but declined to comment on any details. Sources said details would be released next week before the address.

She said the administration had not yet finalized funding plans and underscored the president’s determination to increase investment in child care, early childhood education and making U.S. workers more competitive.

“His view is that that should be on the backs — that can be on the backs of the wealthiest Americans who can afford it and corporations and businesses who can afford it,” Psaki said.

Asked if the proposals would discourage investment in the United States, Psaki said Biden and his economic team did not believe the measures would have a negative impact.

But she noted that Congress, which is deeply divided, must approve the tax measures included in the plan, and other options could still be proposed.

The proposal, which has been in preparation for weeks, triggered sharp declines on Wall Street, with the benchmark S&P 500 index down 1% in early afternoon, its steepest drop in more than a month, after Bloomberg published a report.

Yields on Treasuries, which move in the opposite direction to their price, fell to the day’s low.

Biden’s new plan, likely to cost about $1 trillion, comes after a $2.3 trillion jobs and infrastructure proposal that has already run into stiff opposition from Republicans. They generally support funding infrastructure projects but oppose Biden’s inclusion of priorities like expanding elder care and asking corporate America to pay the tab.

Tax hikes on the wealthy could harden Republicans’ resistance against Biden’s latest “human” infrastructure plan, forcing Democrats to consider pushing it – or least some of the measures – through Congress using a party-line budget vote known as reconciliation.

U.S. Senator Joe Manchin, a Democrat from West Virginia who wields outsize power due to the party’s slim majority, has recently said he is wary of expanding the use of reconciliation.

Wealthy Americans could face an overall capital gains tax rate of 43.4% including the 3.8% net investment tax on individuals with income of $200,000 or more ($250,000 married filing jointly). The latter helps fund the Affordable Care Act.

Currently, those earning more than $200,000 pay an overall rate of about 23.8% including the Obamacare net investment tax instituted as part of the Affordable Care Act. Still, market observers said there was no small amount of doubt whether the capital gains tax proposal would make it through Congress. “If it had a chance of passing, we’d be down 2,000 points,” said Thomas Hayes, chairman and managing member at hedge fund Great Hill Capital LLC, referring to stock market indexes.

(Reporting by Jarrett Renshaw, Trevor Hunnicutt; additional reporting by Andrea Shalal, David Lawder, Dan Burns and Herbert Lash; Editing by Chizu Nomiyama and Cynthia Osterman)

Biden ally in U.S. Senate says Republicans have until end of May for infrastructure deal

By David Morgan

WASHINGTON (Reuters) – Republicans in Congress have until the end of May to negotiate provisions of an infrastructure bill before Democrats opt to move sweeping legislation on their own, one of U.S. President Joe Biden’s closest Senate allies predicted on Wednesday.

Democratic Senator Chris Coons of Biden’s home state of Delaware said several senior Senate Republicans had privately signaled they would support a package of up to $1 trillion that targets roads, bridges and other typical infrastructure areas and includes some tax increases to pay for legislation.

Biden has proposed a more sweeping $2 trillion infrastructure package, which invests in traditional projects but also seeks to change the course of the U.S. economy by addressing climate change and boosting human services such as elder care.

The president and his Democratic allies, who narrowly control both houses of Congress, have insisted that they want Republican support for the package but will not wait long before deciding whether to move forward on their own.

“I believe that President Biden is open to spending the next month negotiating what the possibility is,” Coons told Punchbowl News in an interview. He said he spoke to the president earlier this week.

If no clear deal exists by the May 31 Memorial Day holiday, Coons added, “I think Democrats just roll it up into a big package and move it.”

Biden is expected to meet with a bipartisan group of lawmakers on infrastructure next week, said White House spokeswoman Jen Psaki.

Coons said talks with “several fairly seasoned senior Republicans” suggest bipartisan support for a narrower bill that could be funded partially by higher gasoline taxes and a new fee for electric vehicles to be dedicated to road infrastructure.

But the president’s larger plan faces determined opposition from Republicans including Senate Minority Leader Mitch McConnell, who describes the Biden package as “a Trojan horse” for tax hikes and unnecessary spending.

“There’s broad bipartisan support for tackling the infrastructure issue. But it depends on what your definition is,” McConnell told a Wednesday news conference in his home state of Kentucky.

“Infrastructure is roads, is bridges. It’s broadband. But beyond that, they’ve thrown everything but the kitchen sink into it,” he said.

Republican opposition raises the odds Democrats will use a maneuver called reconciliation to pass a package with just their own votes. Democrats control half the 100 seats in the Senate with Kamala Harris, Biden’s vice president, the tie-breaking 51st vote.

(Reporting by David Morgan; Editing by Scott Malone and Howard Goller

Biden says $2 trillion jobs plan rivals the space race in its ambition

By Steve Holland and Jarrett Renshaw

PITTSBURGH (Reuters) -President Joe Biden on Wednesday called for a sweeping use of government power to reshape the world’s largest economy and counter China’s rise in a $2 trillion-plus proposal that was met with swift Republican resistance.

The president’s “American Jobs Plan” would put corporate America on the hook for the tab as the government creates millions of jobs building infrastructure, such as roads, tackles climate change and boosts human services like care for the elderly.

“It’s a once-in-a-generation investment in America, unlike anything we’ve seen or done since we built the interstate highway system and the space race decades ago,” Biden said in unveiling the program in Pittsburgh.

He said he had no problem asking companies to foot the bill and is “gonna put an end” to Amazon.com Inc and other major companies paying little to nothing in federal taxes.

Biden’s second multitrillion-dollar legislative proposal in two months in office sets the stage for a partisan clash in the U.S. Congress, where members largely agree that investments are needed but are divided on the total size and inclusion of programs traditionally seen as social services.

Another economic proposal Biden will release in April could add a further $2 trillion to the total price tag.

Coupled with his recently enacted $1.9 trillion coronavirus relief package, Biden’s infrastructure initiative would give the federal government a bigger role in the U.S. economy than it has had in generations, accounting for 20% or more of annual output.

Biden’s team believes a government-directed effort to strengthen the economy is the best way to provide support to an economy walloped by the coronavirus pandemic and contend with increased competition and a national security threat posed by China.

The proposal was greeted icily by conservatives and major business groups.

Republican Senator Mitch McConnell said the proposal was “another Trojan horse for far-left demands” one day after Biden called to brief the minority leader on the proposal. McConnell said raising taxes would be “killing jobs and slowing wage growth when workers need a fast recovery.”

PAYING FOR IT

Biden is ignoring a campaign promise to raise taxes on wealthy individuals, at least for now.

The plan would instead increase the corporate tax rate to 28% from 21% and change the tax code to close loopholes that allow companies to move profits overseas, according to a 25-page briefing paper released by the White House.

Biden said the goal was not to “target” businesses but to address divisions and inequality worsened by the pandemic.

The plan would spread the cost for projects over an eight-year period and aims to pay for it all over 15 years, without adding to the country’s long-term debt, the White House said.

Neil Bradley, chief policy officer at the nation’s largest trade group, the U.S. Chamber of Commerce, said while the organization shares Biden’s sense of urgency on infrastructure, his plan is “dangerously misguided.”

“We strongly oppose the general tax increases proposed by the administration which will slow the economic recovery and make the U.S. less competitive globally,” Bradley said.

The plan includes $621 billion to rebuild infrastructure, such as bridges, highways and ports, and a historic $174 billion investment in the electric vehicle market that sets a goal of building a nationwide charging network by 2030.

The program’s focus on union-represented jobs and projects to mitigate climate change would deliver long-sought liberal goals.

Administration officials also said they hoped to address economic inequality created by racial discrimination, for instance cutting air pollution that affects Black and Hispanic communities near ports or power plants.

Congress will be asked to invest $400 billion in expanding access to affordable community-based care for aging Americans and people with disabilities. It is aimed at low-wage workers in that industry, who are disproportionately women of color.

There is $213 billion included to build and retrofit environmentally sustainable homes along with hundreds of billions to support U.S. manufacturing, bolster the nation’s electric grid, enact nationwide high-speed broadband and revamp the nation’s drinking water systems.

ANOTHER PROPOSAL COMING

Biden is moving forward with the economic plan while attempting to deliver on promises to provide enough COVID-19 vaccines for all American adults by the end of May. The White House is also dealing with a rise in the number of migrants at the southern border and fallout from back-to-back mass shootings.

The plan forms one part of the “Build Back Better” agenda that the administration aims to introduce. A second legislative package being marketed as helping families is due within weeks.

That package is expected to include the expansion of health insurance coverage and child tax benefits, as well as paid family and medical leave.

House of Representatives Speaker Nancy Pelosi has signaled she hopes to pass the infrastructure plan by July 4, although that time line could easily slip as Democrats with narrow majorities in both the House and Senate race to strike a deal on the details.

The jockeying has already begun. Moderate Democrats have said the package should be more targeted to traditional infrastructure projects to attract Republican votes. Liberal lawmakers want to tackle climate change and economic inequality with resources that reflect the size of those challenges.

Representative Pramila Jayapal, a leading liberal Democrat, said on Tuesday that the proposal Biden laid out as a presidential candidate was between $6.5 trillion and $11 trillion over 10 years.

“We’d like to see a plan that goes big,” Jayapal said.

(Reporting by Steve Holland and Jarrett Renshaw; Writing by Trevor Hunnicutt; Additional reporting by Richard Cowan, David Morgan and Makini Brice; Editing by Dan Burns, Sonya Hepinstall and Peter Cooney)