By: Wayne Zell
House Democrats have drafted a tax plan that would make smaller increases to the corporate and capital gains rates than envisioned by the Biden administration.
The Democratic proposal would raise the corporate tax rate to 26.5% from 21%, people familiar with the matter said Sunday. President Joe Biden’s tax and social spending plan called for a 28% rate.
A document circulating among members of both parties and obtained by Bloomberg indicated that the corporate rate hike may only apply to larger corporations, while smaller businesses would pay either 18% or 21% depending on their earnings.
The top rate on capital gains would rise from 20% to 25% under the House plan, instead of the 39.6% Biden proposed, the people said.
The document outlines a number of other corporate and income tax changes, including a top individual income tax rate of 39.6%, limiting deductions on executive compensation, and higher taxes on tobacco and e-cigarettes.
The House Ways and Means Committee is scheduled to continue its markup on budget reconciliation proposals Tuesday. The tax-writing panel on Friday released a package of tax incentive proposals that would extend the more generous child tax credit through 2025, extend various clean energy tax credits through 2031, and expand the electric vehicle tax credit.
Sen. Joe Manchin (D-WV) has gone on record as opposing the magnitude of the $3.5T infrastructure package, which will further affect the scope of the tax proposals.