Taxes in the House social spending bill could bring in $1.48 trillion
Tax hikes on the wealthy and large corporations in the proposed social spending bill would rake in $1.48 trillion, the Joint Committee on Taxation estimated. Their analysis comes as Democrats are hitting the gas pedal on efforts to pass President Joe Biden's agenda, arguing the plan would be paid for.
The White House framework of the Build Back Better Act puts the cost of the entire bill at $1.85 trillion. But that version of the proposal does not include paid leave or raising the cap on the state and local tax deduction — known as SALT — which were included in the House version of the bill which could be voted on this week. But the provisions included in the agenda to pay for it remain closely aligned.
Changes to the corporate tax code and reforms to international taxation would raise about $814 billion over 10 years, according to the Joint Committee on Taxation. That includes nearly $319 billion raised by the proposed corporate alternative minimum tax and $124 billion from taxing company stock buybacks. At the same time, the committee estimates the proposals raising taxes on the wealthy would bring in more than $640 billion, including $227 billion from a surtax on multimillionaires, $250 billion for applying the net individual income tax to some business incomes and $160 billion by limiting the business losses for high earners.
The analysis does not include an estimate of how much increased IRS enforcement on the rich would bring in. The White House estimates that would generate $400 billion in revenue. A report by Moody's Analytics suggests increased tax enforcement on the wealthy "might not raise as much additional revenue as anticipated."
But Democrats have seized on the numbers. House Speaker Nancy Pelosi pointed to the Joint Committee on Taxation estimates on Thursday, claiming it validates how the agenda is "solidly" paid for.
The Biden administration argues that the provisions to raise revenues in the Build Back Better Agenda will actually reduce the deficit. They estimate the money generated would total $2.15 trillion.
"These savings come from ensuring large multinational corporations and wealthy Americans pay their fair share and reducing the cost of prescription drugs. These provisions will not raise taxes on any taxpayer making less than $400,000," wrote Treasury Assistant Secretary for Tax Policy Lily Batchelder.
Their latest estimates include both the Joint Committee on Taxation numbers as well as the Treasury Department's estimate that spending on the IRS for increased enforcement and technology would raise $400 billion, as well as a Congressional Budget Office estimate that measures to reduce the cost of prescription drugs in the bill would save $250 billion.
The Congressional Budget Office has not released a score of the latest social spending bill being pushed by Democrats. Some moderate lawmakers have said they want to see the CBO score to learn the full cost of the legislation over 10 years.
"I truly believe that we need to slow down," Senator Joe Manchin of West Virginia said Thursday morning.
The Committee for a Responsible Federal Budget said the social spending framework heavily relies on "massive gimmicks" to make the numbers work. The organization points out provisions like the child tax credit and earned income tax credit are only expanded for a year in the proposal. Other provisions would also end within the next decade.
Should all provisions of the Biden framework be extended, it would cost closer to $4 trillion over 10 years, according to the nonpartisan Penn-Wharton budget model, which forecasts the economic effects of policy proposals.