Pay Bills

Democrats won’t give up on tax plans despite spending boom in spending

Still, some important Democratic tax priorities appear doomed to be dropped even as President Joe Biden and Democratic leaders in Congress come to terms with Manchin on the social spending and climate change agenda.

Manchin’s insistence that they refrain from using synchronization maneuvers that would artificially reduce the cost of legislation could eliminate provisions such as an extension of the earned income tax credit, which would be difficult. to make the cut if Democrats were to pick priorities.

Perhaps more importantly, Manchin continues to take a skeptical eye on what many Democrats see as a centerpiece of their agenda – the more generous version of the Child Tax Credit that pays monthly payments of up to $ 300. $ per child to millions of families across the country.

On the bright side for Democrats, Manchin has long made it clear that he doesn’t believe the rich and corporations pay enough taxes.

Manchin said in a West Virginia radio interview Monday that making sure people pay “their fair share” of taxes is the main reason he’s got so far into the negotiations.

“You have a chance to fix the tax code which makes it fair and equitable,” he said.

Yet Manchin’s comments also underscored the tightrope that Democrats will have to walk to push through a package, given their narrow margins in the House and Senate.

He pointed out that his main interest was in tackling the GOP tax cuts in 2017 – an interest shared by virtually every other Congressional Democrat apart from Senator Kyrsten Sinema (D-Arizona), who opposed him only vetoed plans to raise the highest individual and corporate rates put in place by the Jobs and Tax Cuts Act.

Democrats replaced those two with a minimum corporate accounting income tax and a personal income surtax north of $ 10 million a year, neither of which prompted a major pullback from Manchin.

It’s unclear what Manchin’s ruling means for other crucial parts of the tax debate this year, including lifting the $ 10,000 limit Republicans have placed on state and local tax deductions in their tax review. Some Democratic lawmakers in Blue states like New Jersey and New York have said they can’t support any spending deal that doesn’t include SALT cap relief, and Manchin hasn’t spoken much about the question.

On top of that, Democrats might have to play with the start dates for several of their major revenue streams, which were due to come into effect next year – such as an expansion of the net income tax on investments from Obamacare and the surtax on the rich.

Other tax increases, such as the corporate minimum tax and the increase in the existing global minimum tax in the United States, the low-tax global intangible income levy, GILTI, are not expected to come into effect. effective before 2023.

Then there’s the child tax credit, which centrist and progressive Democrats have said is a top priority. They acknowledge that Manchin is not the biggest fan of this latest CTC expansion, despite their best lobbying efforts.

Supporters of the current child tax credit are hoping they can persuade Manchin to support some sort of extension – although they do admit it could be more modest than they want, given Manchin appears to have fundamental issues with it. the scope and objective of the current program, which expires at the end of December.

Manchin spoke of tougher credit testing and tying work requirements to receiving monthly family allowances – though Democrats on the Hill say they believe he dropped that latest claim in exchange for ‘a one-year extension of the current policy, before finally opposing the package entirely.

Even if Biden and Democratic leaders on the Hill reach an agreement with Manchin on comprehensive legislation, their tax ambitions could face another trial.

Manchin wants Senate committees to take care of all spending before it is considered on the ground – something Democratic leaders have been trying to avoid, given that Republicans have so many members in it. committees than in the Senate 50-50.

A Democratic couple with potentially difficult re-election battles next year, Senators Catherine Cortez Masto of Nevada and Maggie Hassan of New Hampshire, could face tricky amendment votes if revised legislation is considered by the committee of finance responsible for writing taxes.

Either way, the more progressive wing of the party seems likely to end up aligning itself, as it did earlier this year on both the social spending package and the bipartisan bill on infrastructure. K Street is betting on it.

“There will be another round of mourning on the part of the progressives,” said a tax lobbyist, of the possibility that Democrats will have to rally around a bill that more fully responds to Manchin’s demands. “But in the end, they would also accept the legislation.”

Aaron Lorenzo contributed to this report.