Congress’ Tax Increase Plans Taking Shape So Act Now
As Connecting the Dots has reported many times over the last several months, the White House and Democrats in Congress plan to consider new taxes on business to pay for their $3.5 trillion “human” infrastructure plan. While lawmakers still have not released the full detail of their revenue plan, last week Senate Majority Leader Chuck Schumer (D-N.Y.) pledged to move “full-speed ahead” to pass this legislation.
MSCI is working with colleagues at other trade associations to oppose the tax increases that are likely to be included in the bill. In the last week alone, MSCI joined:
- A Main Street Employers coalition letter signed by 120 organizations that outlined opposition to all tax proposed hikes on employers. That letter is available here.
- A Family Business Estate Tax Coalition letter signed by 165 organizations that opposed the repeal of step-up in basis, a provision that prevents family-owned businesses from being hit with two significant tax bills when a family member passes away. That letter is here.
The House Ways and Means Committee, the tax-writing panel in the lower chamber of Congress, released its$3 trillion draft revenue plan on Sunday, September 12. It would:
- Raise the corporate income tax rate to from 21 percent 26.5 percent;
- Limit the interest deduction of certain domestic corporations in proportion to their share of the total earnings of their international financial reporting group;
- Institute a 16.5 percent minimum tax on foreign corporate income;
- Limit the 199A deduction for pass-through businesses by setting the maximum allowable deduction at $500,000 in the case of a joint return or $400,000 for an individual return;
- Increase the top individual income tax rate from 37 percent to 39.6 percent for married couples with taxable incomes higher than $450,000, heads of households with taxable incomes higher than $425,000, and individuals with a taxable income higher than $400,000;
- Expand the net investment income tax to cover net income derived in the ordinary course of a trade or business for taxpayers with taxable incomes higher than $400,000;
- Enact a three percentage point surtax on individual income above $5 million;
- Raise the top capital gains rate from 20 percent to 25 percent;
- Accelerate the expiration of the estate and gift tax exemption to December 31, 2021 (the $24 million exemption is set to expire at the end of 2025);
A summary of the plan is available here.
MSCI asks that its member company employees and leaders contract their members of Congress to ask that they oppose the $3.5 trillion budget reconciliation. There are several ways to do so, including:
- Calling your lawmakers directly. Contact information for U.S. senators is here. Contact information for U.S. House lawmakers is here.
- Using the U.S. Chamber of Commerce’s website to send a letter directly to individual senators and members of Congress.
- Taking action through the Coalition to Protect American Workers.
Grassroots efforts to oppose these tax increases are working.
As The Hill reported last week, Rep. Stephanie Murphy (D-Fla.) said she will vote against the tax increases that are under consideration in the House Ways and Means Committee. House Democrats also generally seem to be hesitant about raising taxes too far. In a separate report, The Hill said House Ways and Means Chair Richard Neal (D-Mass.) is worried about keeping his caucus together while Senate Finance Committee Chair Ron Wyden (D-Ore.), who oversees tax policy in the upper chamber, said he is committed to “to raising the revenue needed to pay” for the $3.5 trillion budget reconciliation plan. On Sunday, Sen. Joe Manchin (D-W.Va.), a key vote in the Senate, said he would not vote for the $3.5 trillion spending bill.
The growing worries about increasing taxes on Americans came as the National Association of Manufacturers released a survey that found:
- 94 percent of manufacturers believe higher taxes would harm their businesses and
- About nine in 10 manufacturers believe it would be more difficult to expand their workforce, invest in new equipment, raise wages or expand facilities if taxes go up.