Progressives prepare to launch counterattack in tax fight

Progressive groups are gearing up to promote President Biden’s proposals on tax hikes for wealthy individuals and corporations as Democrats in Congress move forward with drafting a multitrillion-dollar social spending package.

Biden and congressional Democrats aim to pay for new spending in areas such as education, health care and climate through those tax increases. But business groups are funding a lobbying blitz against the proposals, targeting Democratic lawmakers who have raised concerns about the tax plans.

Progressive advocacy organizations and labor groups hope to counteract K Street’s lobbying push and keep Democrats united. They’re arguing that proposals to raise taxes on wealthy people and corporations are in line with public sentiment. 

“Taxing the rich is incredibly popular, and so I think we need to remind some Democrats about that,” said Maura Quint, executive director of the progressive group Tax March. “Ultimately, I do believe that Democrats in general support Biden’s plans.”

Congressional Democrats are in the process of crafting a massive bill that could include as much as $3.5 trillion in new spending and tax cuts and would advance much of Biden’s economic agenda. The House is scheduled to start committee markups of portions of the package on Thursday.

Biden and Speaker Nancy Pelosi (D-Calif.) have expressed a desire to pay for the full cost of the bill, and the president has proposed a series of ways to offset costs by raising taxes on the wealthy and corporations and by strengthening IRS enforcement efforts.

No Republicans are expected to vote for the bill, meaning nearly every Democratic House member and every Democratic senator will need to back the package in order for it to land on Biden’s desk. To make that happen, Democratic leaders will need to incorporate tax increases that can garner support from moderate and progressive lawmakers alike.

Some Democrats have already taken issue with several of Biden’s tax proposals, including those that would raise the corporate tax rate from 21 percent to 28 percent, increase taxes on U.S. multinational corporations’ foreign earnings and increase taxes on capital gains.

These proposals have drawn even greater criticism from business groups, who argue that they would hurt the economy. Business lobbyists have expressed confidence that they will be able to convince Democrats to water down their proposed tax increases.

Progressive groups are seeking to push back on criticisms of specific aspects of Biden’s proposals.

For example, the Center for American Progress (CAP) released a report this week, which the White House highlighted, that makes the case for Biden’s proposal to tax capital gains at death.

“Those affected by the Biden proposal will not be family farmers or family business owners, but rather the heirs of stockholders, bondholders, and landlords,” the report said. “The working class will be protected, even as the passive rich will not.”

CAP’s report came after some congressional Democrats from agriculture-heavy areas raised concerns about the capital gains proposal and as lobbyists have signaled they want to dismantle it.

Last week, former Sen. Heidi Heitkamp (D-N.D.) launched a new group that is advocating against taxing capital gains at death. She drew quick criticism from progressives, who pointed to comments she made on ABC News earlier this year when she criticized the “stepped-up basis” tax break benefiting heirs. Biden’s proposal would end that tax break.

When asked about the contrast Wednesday, Heitkamp said on CNBC that she supports capital gains reforms but doesn’t like the idea of taxing unrealized capital gains.

Another of Biden’s proposals that progressives are defending is his plan to raise taxes on corporations’ foreign earnings.

After a group of 11 Democrats, including several members of the tax-writing House Ways and Means Committee, raised concerns last month about dramatically increasing a U.S. minimum tax on foreign earnings, a group of labor organizations wrote to committee Chairman Richard Neal (D-Mass.) advocating for raising taxes on multinationals.

“We must not waste this historic opportunity to crack down on offshore corporate tax avoidance and align our tax rules with the interests of working people rather than the ultra-wealthy and multinational corporations,” the labor groups, which included the AFL-CIO and the American Federation of State, County and Municipal Employees (AFSCME), wrote.

Labor unions and wealthy individuals who back Biden’s proposed tax increases are publicizing their support for his plans.

“For too long, workers have shouldered too much of the burden,” said AFSCME President Lee Saunders. “Now it’s time for the wealthy to step up and pay their fair share.”

A group of more than 200 millionaires and corporate leaders sent a letter to congressional leaders on Wednesday highlighting their support for several of Biden’s proposals, including capital gains and a 28 percent corporate tax rate.

“It would defy common sense not to have those of us who make the most, have the most, and would suffer the least do marginally more to secure our nation’s future,” the group wrote in their letter, which was organized by the advocacy organization Voices for Progress. “Biden’s tax plan does just that.”

Another group of wealthy Americans, called the Patriotic Millionaires, is talking to congressional offices to highlight their support for tax increases.

The Patriotic Millionaires are telling lawmakers that “we would prefer to not live in a country with a few rich people and lots of poor people,” said Morris Pearl, the group’s chair and a former BlackRock managing director.

Progressives acknowledged that they face challenges in uniting Democratic lawmakers around Biden’s proposed tax increases, given the lobbying against the proposals from the business community.

Business groups and corporations spent nearly $1.5 billion on lobbying on all issues in the first half of this year, which greatly exceeds the roughly $22 million in spending by labor groups and $81 million in spending by liberal and conservative groups, according to OpenSecrets.org.

“Clearly what is happening is that some lawmakers are responding to a lobbying campaign by corporations and very wealthy people, and that campaign is really kicking into gear now,” said Steve Wamhoff, director of federal tax policy at the left-leaning Institute on Taxation and Economic Policy.

Progressives hope that Democratic lawmakers will be convinced to stand behind tax increases on high earners and corporations in light of polls that show that the public supports higher taxes on those groups.

“Raising taxes on the wealthy and big corporations is not just popular across the country, but also in battleground districts,” said Bryan Bennett, senior director of polling analytics at the Hub Project and an adviser to the left-leaning polling firm Navigator Research.

Damon Silvers, senior strategic adviser and special counsel to the president at the AFL-CIO, said that proposals to raise taxes on the wealthy and corporations are easy to get union members to support.

“Union members want to see their elected officials do this,” he said.

Frank Clemente, executive director of the progressive group Americans for Tax Fairness, said his group is trying to convince lawmakers that “the tax issue isn’t vinegar.” Instead, the public views higher taxes on the rich and corporations more like sugar, he said.

Karl Evers-Hillstrom contributed reporting.