House Democrats Working on Sweeping Taxation Plan; Corporate Rate to Hit 26.5%

Leading Democrats in the U.S. House of Representatives said on Monday that they are seeking to raise the nation's tax rate on corporations to 26.5 percent, up from the current 21 percent.

This is part of a sweeping plan that includes tax increases on the wealthy, corporations, and investors, according to Reuters.

$3.5 Trillion Domestic Investment Plan

The House Ways and Means Committee said that it will debate legislation this week that would achieve the change as part of Democrats' broader, $3.5 trillion domestic investment plan.

Taxation Wikimedia Commons

The Wall Street Journal first reported the outline of the proposal, citing a congressional aide. A spokesman for the House Ways and Means Committee, which is responsible for tax policy, did not immediately respond to a request for comment.

Democrats are also expected to propose a 3% surtax on individual income above $5 million as part of a wide-ranging $3.5 trillion budget bill.

The tax-writing panel has scheduled work sessions for Tuesday and Wednesday to debate tax policy and other matters under its jurisdiction to be included in the $3.5 trillion "reconciliation" bill.

Level the Playing Field

In a statement, the committee said that in addition to raising corporate taxes, it will include a provision in its bill to "level the playing field by cutting taxes for our nation's smallest businesses."

Currently, the federal tax rate on corporations is 21 percent, down from 35 percent prior to the 2017 Republican tax cut law.

US Congress Lars Di Scenza / Wikipedia Commons

President Joe Biden had proposed raising the current rate to 28 percent.

White House spokesman Andrew Bates said House Democrats are making "significant progress towards ensuring our economy rewards work and not just wealth by cutting taxes for middle class families; reforming the tax code to prevent the offshoring of American jobs; and making sure the wealthiest Americans and big corporations pay their fair share."

The Democrats are also considering raising the minimum tax on U.S. companies' foreign income to 16.5% from 10.5% and the top capital gains tax rate to 28.8% from 23.8%.

The Overall Package

The overall package of tax changes, summarized in a four-page document circulating among lobbyists and congressional aides on Sunday, was estimated to raise $2.9 trillion in new revenue, largely covering the costs of President Joe Biden's $3.5 trillion domestic investment plan.

The proposal would also raise the top individual tax rate to 39.6% from 37%, as part of a series of changes aimed at high income individuals that was estimated to raise approximately $1 trillion.

The package also includes $80 billion more in additional funding for the Internal Revenue Service specifically devoted to tax enforcement of high income taxpayers, which could raise as much as $200 billion in additional revenue.