Billionaire tax takes shape as Biden pushes for budget deal

Democrats are working frantically to shore up the revenue side of President Joe Biden’s domestic package, poised to unveil a new billionaires’ tax to help pay for his social services and climate change plan after earlier tax plans fizzled.

Sen. Joe Manchin, D-W.Va., a key holdout vote on President Joe Biden's domestic agenda, chairs a hearing of the Senate Energy and Natural Resources Committee, at the Capitol in Washington, Tuesday, Oct. 19, 2021. [Photo: AP/J. Scott Applewhite]

Biden said Monday he’s hopeful the talks with Congress can wrap up overall agreement on the package this week. It's tallying at least $1.75 trillion, and could still be more. Biden said it would be “very, very positive to get it done” before he departs for two overseas global summits.

“That’s my hope,” the president said before leaving his home state of Delaware for a trip to New Jersey to highlight the child care proposals in the package and a related infrastructure measure. “With the grace of God and the goodwill of the neighbors.”

Resolving the revenue side is key as the Democrats scale back what had been a $3.5 trillion plan, insisting all the new spending will be fully paid for and not pile onto the debt. Biden vows any new taxes would hit only the wealthy, those earning more than $400,000 a year, or $450,000 for couples.

The White House had to rethink its tax strategy after one key Democrat, Sen. Kyrsten Sinema, D-Ariz., objected to her party's initial proposal to raise tax rates on wealthy Americans by undoing the Trump-era tax cuts on those earning beyond $400,000. Sinema also opposed lifting the 21% corporate tax rate. With a 50-50 Senate, Biden has no votes to spare in his party.

Instead, to win over Sinema and others, the White House has been floating a new idea of taxing the assets of billionaires and another that would require corporations to pay a 15% minimum tax, regardless of if they show any profits. Those both appear to be gaining traction with another pivotal Democrat, Sen. Joe Manchin, D-W.Va.

Democrats on the Senate Finance Committee, led by Sen. Ron Wyden of Oregon, are prepared to roll out the tax revenue plan in a matter of days. It is likely to include other revenue-raising tax measures, including a plan to beef up the Internal Revenue Service to go after tax scofflaws.

Once Democrats agree to the tax proposals, they can assess how much is funding available for Biden's overall package to expand health care, child care and other climate change programs.

Democrats were hoping Biden could cite major accomplishments to world leaders later this week. They are also facing an Oct. 31 deadline to pass a related $1 trillion bipartisan infrastructure package of roads, broadband and other public works before routine federal transportation funds expire.

“We need to get this done,” Biden said in remarks at a New Jersey transit center.

Biden huddled with the conservative West Virginia Democrat Manchin and Senate Majority Leader Chuck Schumer at the president’s Delaware home on Sunday as they work on resolving the disputes between centrists and progressives that have stalled the bill. A person who requested anonymity to discuss Manchin’s position told The Associated Press the senator is agreeable to the White House’s new approach on the tax proposals.

Picking up a populist theme sounded during the presidential campaign, Biden is pushing to have corporations and the wealthy pay a “fair share” and end the practice of some of the wealthiest Americans skipping out on any taxes.

The billionaires' tax is being modeled on a 2019 bill from Wyden to treat assets as income. Another idea, for a 3% ultra-rich surtax, has been proposed by Sen. Elizabeth Warren, D-Mass.

Under Wyden's emerging plan, the billionaires' tax would hit the wealthiest of Americans, fewer than 1,000 people. It would require those with assets of more than $1 billion, or three-years consecutive income of $100 million, to pay taxes on the gains of stocks and other tradeable assets, rather than waiting until holdings are sold.