Pressure from the two most conservative senators defeats his bill
U.S. President Joe Biden will not follow through on his promise to undo tax reform implemented by his predecessor in office, Republican Donald Trump, in late 2017.
The backbone of it, a corporate tax cut from 35% to 21% as well as a 37% income tax for wealthier Americans, survives Democrats’ efforts to increase social spending through tax increases.
But in these matters, history speaks for itself. It should be remembered that former President Barack Obama also maintained the vast majority of George W. Bush’s tax cuts due to the obstacles posed by trying to raise taxes in Congress.
Proof of this is demonstrated by the resistance shown by the two most conservative Democratic senators: Joe Manchin (West Virginia) and especially Kyrsten Sinema (Arizona) to raise the corporate tax, among other duties.
Sinema has opposed the House of Representatives proposal to raise corporate tax from 21% to 26.5% (to raise about $ 450 billion in 10 years) and increases in capital gains and the higher marginal rate of income tax (which would bring in another $300 billion) .
With these options off the table, Manchin said Tuesday that “there should be” an agreement on a reconciliation framework this week. Democrats are trying to reach a broad agreement on the $1.5 trillion to $2 trillion bill before the end of this week.
Lawmakers are currently seeking to reach a climate agreement before Biden attends the COP26 summit and convince progressive Democrats in the House of Representatives to push through the $550 billion bipartisan infrastructure bill.
Senate Majority Leader Chuck Schumer has indicated that there are only “three or four” areas of disagreement, among which is the main question of how to increase revenues without raising marginal tax rates for businesses or individuals.
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