Wyden releases new tax proposals as Democrats work on $3.5T bill
Senate Finance Committee Chairman Ron Wyden (D-Ore.) on Friday released two tax proposals that could be options for Democrats as they work to determine how to pay for the new spending in their $3.5 trillion social-spending package.
One of the proposals, which Wyden released with Senate Banking Committee Chairman Sherrod Brown (D-Ohio), would create a 2 percent tax on the amount that publicly traded companies spend on buying back their own stock. It comes after Democrats criticized corporations’ stock buybacks following enactment of Republicans’ 2017 tax law.
“Instead of spending billions buying back stocks and handing out CEO bonuses, it’s past time Wall Street paid its fair share and reinvested more of that capital into the workers and communities who make those profits possible,” Brown said in a statement.
The second proposal Wyden floated focuses on reforming tax rules for partnerships in an effort to prevent wealthy investors and corporations from avoiding taxes.
“This proposal simply reduces complexity by closing loopholes that allow those at the top to pick and choose when, and whether, to pay tax,” Wyden said.
The two proposals were released as Democrats continue crafting their social-spending package. A key issue for Democrats is figuring out how to offset the cost of their investments in areas such as health care and child care. Some other revenue ideas, such as changes to capital gains taxes and the international tax system, have divided Democratic lawmakers.
Wyden’s office said that the partnership proposal would raise at least $172 billion over 10 years, and the stock buyback proposal would raise around $100 billion.
The proposal also comes as Sens. Joe Manchin (D-W.Va.) and Bernie Sanders (I-Vt.), two senators on opposite ends of the Democratic caucus, are fighting for their legislative priorities in the spending bill.
Several progressive groups are supporting the stock buyback measure, including Americans for Tax Fairness and the Center for American Progress (CAP).
CAP Senior Fellow Seth Hanlon said the measure is “a further illustration that Congress has plenty of progressive, common-sense revenue options to consider and therefore no excuse to shortchange the critical investments we need.”
However, the U.S. Chamber of Commerce quickly pushed back on the legislation.
“Stock buybacks, like dividends, not only give investors a return on their money, but also allow investors to decide how best to put their money to use,” said Tom Quaadman, executive vice president of the Chamber’s Center for Capital Market Competitiveness. “Shareholders often reinvest gains from buybacks into growing new businesses and creating jobs, which means that proposals to restrict or discourage buybacks would ultimately be detrimental to the U.S. economy and American families at a time of economic uncertainty.”
Sen. Pat Toomey (Pa.), the top Republican on the Senate Banking Committee, also criticized the proposal, saying it “will hurt economic growth and discourage business from going public.”
Updated at 2:15 p.m.