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LIVE COVERAGE: Tax hikes take center stage in Ways and Means markup

by The Hill staff - 09/14/21 8:22 AM ET

The House Ways and Means Committee on Tuesday held the third day of its markup of key portions of Democrats’ $3.5 trillion social spending package, with tax provisions front and center during the remainder of the markup.

Late Friday, committee Chairman Richard Neal (D-Mass.) released legislation on the child tax credit, infrastructure financing and energy tax credits. Then on Monday, he released legislation that would increase taxes on high-income individuals and corporations in an effort to offset the cost of spending and tax cuts elsewhere in the package.

Tuesday was the first time that many lawmakers spoke publicly about the tax-increase proposals, which have generated pushback both from conservatives and progressive groups.

See our coverage of Day 3 of the markup below:

Markup wraps up for the evening

8:14 p.m.

The Ways and Means Committee markup ended for the evening, and is scheduled to resume Wednesday at 9 a.m.

Wednesday’s meeting is expected to be the last day of the markup, and the committee is expected to vote then to pass a portion of the spending bill focused on renewable energy incentives, infrastructure financing, health care, tax credits for families and tax increases on high-income households and corporations.

Republicans offered a series of amendments Tuesday evening that were focused on health care-related portions of the bill, but those amendments were rejected by Democrats.

— Naomi Jagoda

Republican invokes Ocasio-Cortez’s Met Gala dress

5:29 p.m.

Rep. Tom Rice (R-S.C.) referenced the dress Rep. Alexandria Ocasio-Cortez (D-N.Y.) wore to the Met Gala while offering an amendment on the state and local tax (SALT) deduction.

“Last night, we saw our esteemed colleague, Congresswoman Alexandria Ocasio-Cortez, attend the Met Gala wearing a dress emblazoned with the slogan ‘tax the rich,’” Rice said. “If my colleagues really want to tax the rich, they should vote for my amendment.”

Republicans’ 2017 tax law imposed a $10,000 cap on the SALT deduction. The cap, along with other individual provisions in the GOP law, are set to expire after 2025.

Rice’s amendment would make the SALT deduction cap permanent for married couples with income of at least $1 million, and use the revenue raised by that change to extend the GOP tax law’s increase in the standard deduction.

Reps. Bill Pascrell (D-N.J.) and Tom Suozzi (D-N.Y.) responded to the amendment by criticizing the SALT deduction cap.

“It’s not fair to tax people on taxes they’ve already paid,” Suozzi said.

Rice’s amendment failed by a party-line vote of 24-18.

Republicans generally want to preserve the SALT deduction cap, and are highlighting analyses that have found that much of the benefits of repealing the cap would go to high-income households.

The SALT deduction cap is an issue that divides Democrats. Many Democrats from high-tax states such as New York, New Jersey and California want to undo the cap, saying it hurts their states and residents. But some progressives, including Ocasio-Cortez, are concerned that full repeal of the cap would benefit wealthy taxpayers.

The SALT deduction is not currently mentioned in the Ways and Means Committee’s portion of the $3.5 trillion spending bill, but key lawmakers have indicated that relief from the cap remains a priority for House Democrats.

— Naomi Jagoda

House Democrats’ plan would impose biggest tax increases on high earners: JCT

3:45 p.m.

House Democrats’ tax proposals would impose the biggest tax increases on households with income of at least $1 million, according to an analysis released Monday by the Joint Committee on Taxation (JCT).

The analysis takes into account Democrats’ proposals to raise taxes on high-income individuals and corporations as well as their proposals to extend the expansion of tax credits for low- and middle-income households.

In 2023, households with income of above $1 million would see federal taxes increase by 10.6 percent, and they would see their average tax rate increase from 30.2 percent under current law to 37.3 percent. Households with income of under $200,000 would see their taxes decrease, JCT said.

Much of Democrats’ proposed expansion of the expanded child tax credit would expire after 2025 — the same time when the individual tax provisions in Republicans’ 2017 tax law would expire.

JCT estimated that in years following the expiration of the child tax credit expansion, some middle-income groups would see slight tax increases, while households with at least $1 million in income would continue to see larger tax increases.

President Biden has pledged to not raise taxes on households making under $400,000. JCT estimates that a portion of corporate tax increases fall on labor. However, an economic aide to Biden’s presidential campaign said in 2020 that the experience with the 2017 tax law raises questions about that notion.

— Naomi Jagoda

Republicans start offering amendments

1:43 p.m.

Republicans are starting to offer amendments to the portion of the bill that Democrats are debating today, seeking to highlight portions of the bill that they particularly dislike.

Rep. Tom Reed (R-N.Y.) offered the first amendment, which would have removed a provision in the bill that modifies a tax on private colleges’ endowments created by Republicans’ 2017 tax law.

Reed argued that Democrats’ provision would lead to increased college costs, and would benefit “the wealthiest of wealthiest, especially in the Ivy League arena.”

But Democrats criticized the amendment, saying the endowment provision in the bill encourages colleges to use funds to provide financial assistance to students.

Democrats’ provision rewards “those universities that are doing the right thing,” said Rep. Brendan Boyle (D-Pa.).

The amendment failed on a party-line vote of 25-17.

The second amendment, from Rep. Ron Estes (R-Kan.), would have eliminated the entire section of the bill focused on renewable energy tax incentives.

Republicans argued that the energy provisions would lead to increased gas prices and would waste taxpayer dollars. But Democrats argued that the provisions would create jobs and combat climate change.

This amendment also failed by a party-line vote of 25-17.

GOP lawmakers are expected to offer numerous amendments to the bill on Tuesday and Wednesday, but none of them are expected to be adopted.

— Naomi Jagoda

Progressive Democrat presses for further tax increases on multinationals

11:15 a.m.

Rep. Lloyd Doggett (D-Texas) said that the bill should do more to increase taxes on multinational corporations.

“We have great progress this week, but more work ahead in order to truly build back better for all Americans,” the progressive lawmaker said.

The bill the Ways and Means Committee is considering would raise the rate of a minimum tax on U.S. corporations’ foreign earnings to about 16.5 percent, while President Biden had previously proposed raising it to 21 percent.

Doggett urged the Ways and Means Committee to further raise the rate, in order to narrow the gap between the tax rates that companies pay on their domestic and foreign income.

“We should shut the door fully to stop tax incentives for shifting American jobs overseas by reducing the giant gap between the tax rate encouraging an overseas investment and the higher rate for investment here at home,” Doggett said.

Democrats are divided on international tax changes. While Doggett and some progressive groups want the Ways and Means Committee to raise taxes more aggressively on multinationals, some moderate Democrats have said that the minimum tax on foreign earnings should not be increased dramatically.

— Naomi Jagoda

Republicans ask technical questions about bill

10:12 a.m.

Thomas Barthold, chief of staff for the Joint Committee on Taxation, and Amy Hall, staff director of the Ways and Means Health Subcommittee, described the legislation to the lawmakers.

Republicans then asked a series of questions to Barthold, some of which were focused on the impact of the tax provisions on small businesses and the middle class.

Barthold said the Joint Committee on Taxation is preparing an analysis of the impact of the bill on various income groups, and he hopes that analysis will be released later in the day.

The Ways and Means Committee is going to spend the remainder of the markup focused on the wide-ranging section of the bill that covers infrastructure financing, renewable energy tax incentives, expanding the social safety net, prescription drug pricing and tax increases.

— Naomi Jagoda

Ways and Means kicks off tax debate

9:36 a.m.

Neal defended the plan’s proposed tax hikes on wealthy corporations and individuals in opening remarks as his panel resumed marking up its portions of Democrats’ forthcoming social spending package.

Neal said the proposed tax increases “will go a long way in responsibly paying” for the party’s planned investments in its reconciliation package, while also claiming “the rates will still remain lower than they were in the 2017 tax law.”

“And, despite the rhetoric we will hear today, the truth is we have carefully made sure to protect middle-class Americans and small businesses from experiencing any tax increases,” he added, foreshadowing expected GOP arguments against the plan.

Rep. Kevin Brady (Texas), the top Republican on the tax-writing committee, argued Democrats’ spending proposals will ultimately “raise taxes on the middle class and small business.”

“Never has our government wasted so much to kill so many American jobs, drive prices even higher and hook a whole new generation of poor on government dependency,” he said.

“When businesses are fighting to recover from the COVID pandemic, how will raising their taxes, help them get back on their feet and get Americans back to work?” he added.

— Aris Folley