Newly installed as chair of the powerful Senate Budget Committee, Sen. Bernie Sanders (I-VT) released two proposals Thursday that would increase taxes on the wealthy and corporations.
One proposal would restore the corporate tax rate to 35%, up from the 21% rate imposed by the 2017 GOP tax overhaul, while seeking to deter businesses from moving profits offshore.
The other proposal takes aim at concentrated wealth by raising the estate tax to 45% for estates worth between $3.5 million and $10 million, with the tax rate rising to 65% for estates worth more than $1 billion. The current estate tax tops out at 40%, with the first $23.4 million exempted for couples — a structure that eliminates the tax for all but a few thousand estates.
At a hearing Thursday dedicated to “Ending a Rigged Tax Code: The Need To Make the Wealthiest People and Largest Corporations Pay Their Fair Share of Taxes,” Sanders highlighted what he said were the structural problems with the tax system he is trying to fix. “We have a tax code which enables the very, very richest people in America and the largest corporations to avoid paying their share of taxes,” Sanders said. “That has got to change.”
Why now: The hearing and the proposals come as Democrats turn their attention to strengthening the economy and expanding the social safety net in the wake of the Covid-19 pandemic. “The focus on redistributing wealth comes amid concerns about a recovery from the coronavirus-fueled economic crash that has boosted the highest earners more than the working class,” CNBC’s Jacob Pramuk wrote. “Democrats plan to pursue mammoth bills not only to bolster the country’s infrastructure and combat climate change but also to shore up the social safety net with expanded paid leave and pre-K programs.”
But Democrats face a difficult path to overhaul the tax system. Senate Minority Leader Mitch McConnell (R-KY) recently reiterated his long-standing opposition to tax increases of any kind, and the Budget Committee’s ranking member, Sen. Lindsey Graham (R-SC), took the same tack Thursday while arguing that the tax cuts provided by the 2017 GOP tax law were a great success.
Let the game begin: Graham’s stance during the hearing jibes with the messaging being amplified by an alliance of conservative, anti-tax groups — part of what CNBC referred to as a “Super Bowl of tax reform” that will play out in the coming months.
Tim Phillips of Americans for Prosperity, a conservative group backed by billionaire Charles Koch, provided a taste of that anti-tax message as it relates to the latest effort to raise taxes. “The Tax Cuts and Jobs Act was a tremendous win for the American people and helped them keep more of what they earn to put towards their families, businesses, and communities,” Phillips told CNBC. “Clawing back those cuts or adding on new taxes would worsen our already devastated economy, hurt workers’ wages, crush small businesses, and ultimately wouldn’t come close to paying for the partisan wish lists President Biden and congressional leaders are proposing.”
In the end, given Vice President Kamala Harris’s tie-breaking power and a growing willingness to go it alone, Republicans may not be able to stop Democrats from passing a set of tax reforms, though they would still have to resolve numerous internal differences over issues that include the top income tax rate and the size of infrastructure spending.
Even so, conservatives plan to make the process as difficult and unproductive as possible. “Our plans are a full court press to make it the most expensive vote,” anti-tax crusader Grover Norquist told CNBC. “You want to make it so expensive politically so people will reduce the size and scope of the legislation.”