Manchin dampens progressive hopes for billionaires tax

Democratic hopes of including a new tax on the super-wealthy to help pay for their social spending package were fading on Wednesday as centrist Sen. Joe Manchin (D-W.Va.) said he was uncomfortable with the idea.

Democrats already faced a divide between Senate and House lawmakers on how to move forward, with key members in the lower chamber seemingly caught off guard by this week’s rush toward a billionaires tax in the Senate.

Progressives in both chambers have been trying to squeeze the most out of a new chance to raise taxes on the wealthy given longstanding worries about growing inequality aggravated by the Trump tax cuts.

The spending bill looks like it will still include some changes to the tax code, such as a 15 percent minimum corporate tax that Manchin has voiced support for.

But the billionaires tax itself seemed to be on life support given his opposition, and Sen. Kyrsten Sinema’s (D-Ariz.) reluctance to hiking tax rates had poured even more cold water on another left-wing goal.

Progressives were left fuming after the latest developments.

“Every sensible revenue option seems to be destroyed,” Senate Budget Committee Chairman Bernie Sanders (I-Vt.) told reporters Wednesday. “Should we raise corporate tax rates, personal income tax rates for the very wealthy? Of course we should, but at least one person in the caucus doesn’t want to do that. Should we demand that the billionaires pay their fair share in taxes? Yes. There’s another person who doesn’t want to do that.”

The proposal unveiled by Senate Finance Committee Chairman Ron Wyden (D-Ore.) would tax the investment gains by billionaires annually, a shift from present law that only taxes such gains when an investment is sold. Any individual making more than $100 million per year for three years in a row or anyone who has $1 billion in collective assets would be covered by the tax.

Wyden called the effort “historic” and also cast it as a way to capture taxes on the mega-rich who in some cases may not even pay the highest tax rate for income because they do not live on salaries.

“The House says: ‘Why don’t we raise the taxes on the adjusted gross income?’ ” Wyden said alongside Sen. Elizabeth Warren (D-Mass.) on Tuesday evening.

“And I said: ‘Do you all know that if you do that the billionaires still get to skate to tax avoidance because they don’t take an income?’ ” he said.

Wyden’s remarks reflected the divide over the proposal even before Manchin’s comments on Wednesday.

While progressives had long been abuzz about the potential good a big tax hike could do to even out some of the country’s deep rooted inequities, some Democrats in the House were raising concerns about how operational the idea was.

House Ways and Means Committee Chairman Richard Neal (D-Mass.) essentially said that Democrats introduced the concept too soon before lawmakers could fully consider how hard it may be to implement. 

“We want to see the text,” Neal told reporters.

Many Democrats had thought Manchin would be aboard with the idea, as he’d previously talked of the need to ensure the wealthy paid a fair amount of money.

But he sent a very different signal on Wednesday morning.

“I don’t like it,” said the West Virginia Democrat. “I don’t like the connotation that we’re targeting different people.”

Manchin went on to call the status of the conversations in Congress “very convoluted.”

The West Virginia senator after meeting with White House officials softened his tone, telling reporters that he thought people should pay their “fair share” in taxes. But he did not walk back his earlier remarks.

Liberal fervor for some kind of billionaires tax has been steadily growing.

The idea that the ultra-wealthy made large sums of money during COVID-19 as millions of people suffered tremendously maddened Democrats of all stripes.

“The ‘billionaires tax’ that Senator Wyden is working on could be a major step in the right direction,” former Labor Secretary Robert Reich told The Hill. “After all, America’s small handful of billionaires saw their fortunes increase by over $2 trillion during the pandemic.”

President Biden in recent weeks has escalated his own rhetoric on billionaires, asking them to pay their “fair share” — a line Warren often repeated during her presidential campaign in 2020.

“The data is absolutely clear: Over the past 40 years, the wealthy have gotten wealthier and too many corporations have lost their sense of responsibility to their workers, their communities and the country,” the president said last month.

Warren allies and others in the party’s left flank started the week hopeful that something resembling one of their top policy prescriptions could come to pass while Democrats control both branches of government. 

“It’s super easy to administer this for 600 to 700 people,” said Adam Green, co-founder of the Progressive Change Campaign Committee, referring to the amount of people who would theoretically be impacted under the tax.

“Any logistical concerns that people have about how we will implement this really fall by the wayside,” he said.

Sean McElwee, founder of the liberal think tank Data for Progress, said that in focus groups he’s conducted, the idea always has broad support among the public.

“I definitely knew it was always something that was circling around,” he said. “It was tough to hold out hope just because it seemed like a lot of the more conventional stuff was having trouble drawing muster.”

Manchin’s new opposition seems likely to add to tensions that have already been building between progressives and centrists, and that have held up a vote on a $1 trillion Senate-passed traditional infrastructure bill.

“The closer you get to the summit, the steeper it gets and the harder the climb,” a frustrated Rep. Jimmy Gomez (D-Calif.) said before Manchin’s remarks. “We’re getting closer, but the Senate needs to start saying yes or no on issues and stop fucking talking. Right? They’re just talking, talking, talking.” 

This story was updated at 5:29 p.m.