White House floats new tax plan to get enough Senate Democrats behind trillion dollar spending bill

Passage of Biden's bill, now estimated at $2 trillion bill faces resistance from Senate Democrat Kristen Sinema, West Virginia's Joe Manchin
President Biden on October 4, 2021
(Photo by Chip Somodevilla/Getty Images)

The White House is considering new tax-increase plans to get enough Democrat senators to pass President Biden's stalled multi-trillion dollar, social services and climate change package.

The plans call for scrapping a proposed big increase in corporate tax rates and instead including a new, so-called "billionaires' tax" on the investment gains, according to the Associated Press.

The passage of Biden's bill – now estimated at $2 trillion, compared to $3.5 trillion – faces resistance from two Senate Democrats including Arizona’s Kyrsten Sinema, who opposed the original plan to tax the country's highest earners by undoing Trump-era tax breaks.

The plan calls for increasing the tax rates on corporations and wealthy individuals earning more than $400,000 annually.

"This has been declared dead on arrival from the moment I introduced it, but I think we’re going to surprise them, because I think people are beginning to figure out what’s at stake," Biden said Wednesday in Scranton, Pennsylvania, pitching his plan to Americans in the city in which he was born.

To have any chance of passing the measure, Biden needs support from Sinema and West Virginia Sen. Joe Manchin, the other Senate Democrat holdout, with the chamber split 50-50 with Republicans.  

The White House and Democratic leaders have already scaled back the bill's price tag to win support from centrists such as Sinema and Manchin, to the disappointment of the party's progressive wing. 

Administration officials spoke with congressional leaders on the tax alternatives, a person familiar with the private talks told the wire service.

The corporate tax rate is now 21%, and Democrats want to lift it to 26.5% for companies earning more than $5 million a year. The top individual income tax rate would rise from 37% to 39.6% for those earning more than $400,000, or $450,000 for married couples, the Associated Press also reports. 

The 21% corporate rate would stay the same, under the changes being floated. 

However, big companies and the wealthy still appear to face tax increases under the new plan. The White House wants to revive the idea of a minimum corporate tax rate, similar to the 15% rate Biden had proposed earlier this year. 

The proposed billionaires' tax, modeled on legislation from Sen. Ron Wyden, D-Oregon, the chairman of the Finance Committee, who has proposed taxing stock gains of those with more than $1 billion in assets – fewer than 1,000 Americans, the wire service also reports.