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Business leaders are confident that they can stop almost all of President Biden’s proposed tax hikes by pressuring moderate congressional Democrats, Politico’s Ben White reports.
“With business-minded and more centrist members on the Democratic side in both the House and Senate, they look at the scope and breadth of these tax increases for the infrastructure and families plans and they just find them jaw-dropping,” Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, tells White. “From a raw political perspective, it would be a really funky decision for these moderates to say they would be willing to put this much of a wet blanket on an economy that is really poised to take off.”
Executives and lobbyists tell White that an increase in the corporate tax rate from 21% to 25% may be likely, but Biden’s calls for raising the top marginal tax rate from 37% to 39.6% and hiking the capital gains tax for the wealthy, among other proposals, are likely to run into opposition from centrist Democrats. And, they argue, progressives may be more focused on enacting new spending programs than on pushing through tax hikes to pay for them. “If the executives are right, Biden will have to either break his pledge to pay for his massive spending agenda and further swell the deficit or he'll have to sharply scale back his plans,” a step that would anger progressives, White writes.
The White House has defended Biden’s plans, arguing that the tax increases are an essential and popular way to pay for much-needed investments meant to address critical structural problems and inequities, and that the tax changes won’t hurt the economy.
And while Democrats are clearly still grappling with intraparty divisions and messaging strategy, Politico’s Sarah Ferris notes that some in the party see a path to passing tax hikes: “going on the offensive” about the tax hikes while blaming Republican policies, including the 2017 tax cuts, for economic problems.
“It’s important for people to understand this isn’t some radical new idea,” Rep. Susan Wild (D-PA), who represents a swing district and reportedly backs many of Biden's tax plans, told Politico. “This is not socialism. This is, 'How do we pay for things that we actually need?'"