The House Ways and Means Committee released their proposal yesterday outlining new tax hikes to invest in President Joe Biden’s infrastructure bill, and we are incredibly disappointed in what they’ve come up with.
Their plan, assembled by Committee Chair Richard Neal, is an utter failure of not just the President’s agenda, but of the American people. It fails to end the preferential treatment of the rich in the tax code and does almost nothing to address the growing concentration of wealth and power in America. If the proposal becomes law, inequality – the root cause of social unrest – will continue to grow at an accelerating rate, further destabilizing our already unstable nation.
While the bill would raise taxes on wealthy individuals (through increases to the top income tax rate, the capital gains tax rate, a new surtax on incomes over $5 million, and tweaks to the way inheritance income is taxed) and corporations (through increases to the corporate tax rate and the closing of some loopholes), it goes nowhere near far enough.
We are in the midst of an escalating crisis of inequality exacerbated by a global pandemic that has devastated the physical and financial well being of millions of Americans while leaving the country’s billionaires over $1.8 trillion richer. Half measures are not going to cut it – we need bold, structural change, and the Ways and Means proposal is not that.
While there are a number of individual tax changes that should be included in this tax package, there are 3 changes that we believe are necessary in order to challenge the unfair advantage wealthy people currently receive in the tax code, and that we are demanding be added to the reconciliation bill’s tax provisions.
- End the preferential tax rate for capital gains income over $1 million as President Biden requested. There is no intellectual or economic justification for working people in America to pay a higher tax rate than wealthy investors.
- Eliminate the “stepped-up basis” that allows the heirs of billionaires to avoid capital gains taxes on inherited assets (provide a reasonable exemption for family farms). The Committee’s failure to address this problem at all is particularly troubling.
- End the Carried Interest Loophole which allows fund managers to mis-characterize their “ordinary” income as capital gain income for tax purposes. The W&M proposal extends the hold time for investments to 5 years. Given that most PE firms hold investments for 6 years, this change will have essentially zero effect. The loophole should be eliminated entirely or the timeframe should be extended to at least 20 years which would have the same effect.
Democrats in Congress and the Ways and Means Committee are doing the American people a massive disservice by not addressing these economic injustices. The proposal they have released as currently written is unacceptable. Rep. Richard Neal has failed to meet this historic moment, and he needs to take his Committee back to the drawing board and prioritize restoring a basic sense of fairness to the tax code.