Congressional lawmakers are still hammering out a deal on President Biden s multi-trillion-dollar spending package that would boost funding for infrastructure and clean energy, along with social spending initiatives.
The president said this week that he has agreed to cut the mammoth $3.5 trillion price tag and reports suggest lawmakers will land somewhere between $1.75 trillion and $1.9 trillion.
But some Democratic legislators, like Sen. Kyrsten Sinema, D-Ariz., are Democrats. have said they will not agree to a package that includes tax hikes on corporations and high earners.
How has the Biden administration proposed paying for the package?
Biden has advocated for enforcing a 15% minimum tax on corporations across the board, a move the administration has argued will ensure top companies do not skirt paying their fair share. Some of the biggest corporations in America pay nothing in income taxes, press secretary Jen Psaki told reporters Friday. Fifty-five of the biggest companies pay lower rates than wage-earning families. We can stop that by imposing a 15% minimum tax, a minimum corporate tax to make sure large corporations pay their fair share. The original $3.5 trillion package included raising the corporate tax rate to 28%, but as the president said in a town hall event Wednesday, it s all about compromise. I hope you can be a millionaire or a billionaire, he added. Chip in a little bit. Psaki said the president and lawmakers are looking at a global minimum tax to prevent companies from forgoing tax payments by utilizing offshore accounts.
The president believes and a number of other members of Congress believe that we need to stop rewarding companies that have offshore profits and American jobs, Psaki told reporters. That will help to make the United States more competitive and end the race to the bottom. The push for a global minimum tax rate comes as 136 nations agreed to enforce a 15% tax on corporations to make it harder for multinational corporations to skirt taxation.
Over 90% of the global economy, including the U.S. has agreed to target companies that evade tax liabilities in their country of origin by moving profits to low-tax countries like the Cayman Islands and Bermuda a practice that costs the U.S. tens of billions of dollars each year, according to the Treasury Department.
We can also close loopholes for high-income Americans, including a loophole that allows some taxpayers — like hedge fund managers — to escape a Medicare tax imposed on all high-income Americans, Psaki outlined Friday.
The press secretary was referring to hedge fund and private equity fund managers not being forced to pay Medicare payroll taxes each year.
The funds use a loophole to pay a lower federal income tax rate on their compensation than ordinary working Americans, according to the National Women s Law Center.
All income earners in the U.S. are subject to a 1.45 percent payroll tax for Medicare expenses, but capital gains are not subject to the same tax.
Hedge funds and private equity managers are able to reflect profits carried as capital gains by taking the funds as earned interest. Capital gains require a 15% tax on profits, which means investment schemes avoid paying full corporate income tax which was lowered from 35% to 21% under former President Trump.
IRS is cracking down on tax evasion with IRS bank account monitoring.
Democrats have backed a proposal to require banks to report annually on any transaction that exceeds $10,000.
The move is an attempt to prevent tax evasion and would require financial institutions to hand over customer account information to the Internal Revenue Service.
We can crack down on wealthy tax cheats who are taking advantage of every honest taxpayer and invest in enforcement to stop 1% from evading $160 billion in taxes per year, something Treasury secretaries — Republican and Democrats — have expressed support for and feel this is a strong part of the proposal, Psaki said.
But some conservatives have voiced concern over this proposal, saying it is an invasion of privacy.
On the four proposals in total, Republican Sen. David Asman of Alaska told Fox News Saturday that the revenue will not be enough to pay for the new spending. Sullivan's claim that the bill will cost zero is false, Biden said.