The Capitol Beat –Biden Touts Vote on Budget Framework, Votes Remain Unclear

Before heading to the G20 and Climate Summits with his international counterparts today,  President Biden announced a deal on a budget reconciliation framework.  It remains unclear whether all Democrats are on board and if it is sufficient to garner Progressives’ support.  The framework document, a product of months and months of shuttle diplomacy, includes no increases in marginal tax rates, no changes to estate and gift taxes, no changes to the 199A pass-through deduction, and no changes to carried interest.  Note:  Because this is a framework things are still subject to change.

Following are some highlights:

  ·       A 1% surcharge would apply to stock buybacks.

·       The billionaire’s tax has been replaced with the House’s surtax on the wealthy, specifically a 5% tax on incomes above $10 million and an 8% tax on incomes above $25 million.  

·       It will also make changes to the Net Investment Income Tax, or NIIT, presumably to apply the NIIT to non-corporate trade or business income as included in the House reconciliation package.

·       Limiting business losses for the wealthy is probably making the $500,000 limitation on deductibility of losses permanent.

·       Presumably the IRS investments do not include the inflow/outflow information reporting proposal but rather arise from increased enforcement on the wealthy.  

Offsets – Estimates, Subject to Confirmation$ billion
15% Corporate Minimum Tax on Large Corporations325
Stock Buybacks Tax125
Corporate International Reform to Stop Rewarding Companies That Ship Jobs and Profits Overseas350
AGI Surcharge on the Top 0.02%230
Close Medicare Tax Loophole for Wealthy250
Limit Business Losses for the Wealthy170
IRS Investments to Close the Tax Gap400
Prescription Drugs: Repeal Rebate Rule145
Up to a Total of:1995
Policy$ billion
Child Care and Preschool400
Home Care150
Child Tax & Earned Income Tax Credits200
Clean Energy and Climate Investments555
ACA Credits, Including in Uncovered States130
Medicare Hearing35
Higher Ed and Workforce40
Equity & Other Investments90

Finally, this budget framework is down from the original $3.5 trillion price tag. It includes priorities like funding for climate change mitigation measures, childcare and universal preschool paid for with new taxes, including one aimed at millionaires and billionaires, but it omits many Democratic priorities, like paid family leave, free community college and pharmaceutical cost controls.   

We will keep you apprised of any new major developments.

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