President Biden\u2002will trigger a fight over raising taxes when he introduces his budget plan next week, something that Senate Democrats who face a tough road ahead to protect their majority aren\u2019t clamoring for, especially in West Virginia, Montana and Arizona.
\nDemocrats campaigned on repealing the Trump-era tax cuts ahead of the 2020 election but fell short after Sens. Kyrsten Sinema\u2002(I-Ariz.) and Joe Manchin\u2002(D-W.Va.) balked at key elements of Biden\u2019s tax plan, such as raising the corporate tax rate to 29 percent and the top marginal income tax rate to 28 percent.
\nTalk of repealing any of the Trump tax cuts before the 2024 election had fallen off the table and Senate Democrats have recently steered clear of insisting that any deficit reduction plan that comes before Congress this year include big tax increases.
\nNow Biden is putting the topic back in the national spotlight.
\n\u201cI want to make it clear: I\u2019m gonna raise some taxes,\u201d Biden declared at an event in Virginia Beach on Tuesday, previewing his March 9 budget proposal.
\nBiden pledged that \u201cno one \u2026 making less than $400,000 is going to pay a penny more in taxes.\u201d
\nBut putting tax increases front and center when Democrats have to defend 23 Senate seats in the next election is causing jitters because Republicans are sure to latch onto Biden\u2019s proposal to try to paint the Democratic Party at large as a bunch of tax-and-spend liberals. There\u2019s little desire among Democratic lawmakers on Capitol Hill to put vulnerable incumbents such as Sinema, Manchin and Sens. Jon Tester\u2002(D-Mont.) and Sherrod Brown (D-Ohio) in a tough political position when there\u2019s no chance of getting tax hikes through the Republican-controlled House.
\n\u201cWe haven\u2019t gotten that far,\u201d said Sen. Debbie Stabenow\u2002(D-Mich.), a member of the Democratic leadership and the Finance Committee, when asked if Democrats would insist on adding a revenue-raising package to a year-end budget deal.
\nShe said that Democrats are mostly unified in opposition to adding any deficit-reduction deal to legislation raising the federal debt limit, which needs to pass before the August recess.
\nTester, who announced his reelection plans last week, says he could favor proposals to increase \u201ctax equity\u201d but he would not support anything that would raise taxes for lower- and middle-class families.
\n\u201cI don\u2019t know what he\u2019s going to raise taxes on, that\u2019s critical,\u201d Tester said of Biden\u2019s pledge to raise some taxes.
\n\u201cIf it\u2019s about tax equity we\u2019ll take a look at it. If it\u2019s about across-the-board tax increases for everybody it\u2019s probably the wrong time to do it because of inflation,\u201d he added.
\nTester said the possibility of a recession caused by rising interest rates is \u201cof course\u201d a reason to be cautious about raising taxes.
\nManchin, who hasn\u2019t yet decided whether to run for reelection in West Virginia, which Donald Trump carried by huge margins in 2016 and 2020, waved aside a question about raising taxes in a deficit reduction package. When asked about adding tax hikes to a deficit-reduction deal, he said \u201cwe ought to be worried about the $31 trillion debt and how we got here so quick.\u201d
\nManchin punched holes into Biden\u2019s tax plans in the last Congress by saying he would only support raising the corporate tax rate to 25 percent, instead of the 28 percent level favored by Biden.
\nHe also shot down the president\u2019s plan to impose a 20 percent minimum tax on billionaires.
\nInstead of playing defense on tax policy, Senate Democrats want to go on offense by attacking Republicans for backing reforms that would effectively cut Social Security and Medicare benefits. Yet, Biden will trigger a major discussion over raising taxes next week when he will submit his fiscal year 2024 budget proposal to Congress, which the president says will cut $2 trillion from the federal deficit. \u201cI will not raise taxes on anyone making under $400,000 a year. And I will pay for the ideas I\u2019ve talked about \u2026 by making the wealthy and big corporations begin to pay their fair share,\u201d Biden said at his State of the Union address, previewing his budget proposal.
\nSen. Ben Cardin (D-Md.), a member of the Finance Committee, said Biden\u2019s plan will include many of the same proposals he pushed in 2021 and 2022, but they have virtually no chance of passing a divided Congress.
\nHe said Democrats tried to unwind the Trump-era tax cuts and \u201cgot as far as I think we could.\u201d
\n\u201cAs far as the effort we made last Congress to undo some of the rates from the 2017 [tax law] we were unsuccessful and we had control of the House. I don\u2019t see us getting very far this year,\u201d he said.
\nDemocratic lawmakers have shown much less appetite this year for a deficit-reduction package than 2011, the last time there was a standoff over raising the debt limit in Washington.
\nThen-President Obama proposed in April of 2011 cutting the deficit by $4 trillion over 12 years. He suggested $2 trillion in spending cuts across the budget combined with $1 trillion in tax increases that would lower interest payments on the debt by $1 trillion.
\nThis year, however, Democrats are quick to argue that they addressed the deficit by enacting the Inflation Reduction Act last year, which they say will reduce the deficit by $300 billion.
\n\u201cWe Democrats have already walked that walk. In the [Inflation Reduction Act] that was the first major bill that reduced the deficit by $300 billion. In the last year with the Biden administration we reduced the deficit by more than in the Trump years,\u201d Senate Majority Leader Chuck Schumer (D-N.Y.) told reporters Wednesday.
\nHe said \u201cthere\u2019s close to unanimity if not unanimity in our caucus that the Trump tax cuts were extremely bad for the country.\u201d
\nSenate Republican Whip John Thune (S.D.), an author of Trump\u2019s 2017 tax bill, said he doesn\u2019t see much desire among Senate Democrats to revisit those tax cuts ahead of a pivotal presidential election.
\nHe said Democrats \u201cshould be\u201d gun shy about raising tax rates because \u201crecord revenues are coming in\u201d under the current rates.
\nThune instead floated the possibility of a year-end budget deal that would extend bonus depreciation and research and development tax credits, which are top priorities for businesses and many Republican lawmakers.
\nHe said Democrats are demanding in return a renewal of the expanded child tax credit that expired at the end of 2021.
\nCombining extensions of the bonus depreciation and research and development tax credits from the 2017 Trump tax law with a renewal of the expanded child tax credit would add substantially to the deficit if enacted into law. <\/p>\n
Thehill<\/p>\n
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