Sen. Bernie Sanders proposed fresh tax increases on corporations and the wealthiest Americans on Thursday, part of a push both to cut inequality and fund sprawling government programs.
One plan from the Vermont independent would hike the corporate tax rate to 35% and aims to deter companies from taking profits offshore to pay less. Republicans slashed the rate to 21% from 35% as part of their 2017 tax law.
The other proposal from the Senate Budget Committee chairman aims to make the richest Americans pay more. It sets up a progressive estate tax, which would start with a levy of 45% on estates valued between $3.5 million and $10 million. It would rise as high as 65% for estates valued above $1 billion.
“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. That has got to change,” Sanders said Thursday at a Budget Committee hearing.
NPR first reported Sanders’ tax plans. Sens. Kirsten Gillibrand, D-N.Y., Sheldon Whitehouse and Jack Reed, D-R.I., and Chris Van Hollen, D-Md., cosponsored the estate-tax plan. Rep. Jimmy Gomez, D-Calif., will introduce a version of the bill in the House, while Rep. Jan Schakowsky, D-Ill., will put forward the corporate-tax plan.
Sanders proposed the bills on the day he led a hearing in which he pushed for higher taxes on the wealthy and corporations. Sanders, who has long called out a system “rigged” in favor of the rich and powerful, now stands on a broader platform with a committee gavel and narrow Democratic control of the Senate.
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. 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.
Sanders and Democrats face a tricky path toward getting tax increases into law. Republicans in the Senate will likely oppose hikes, meaning Democrats may have to pursue legislation through budget reconciliation, which would only require support from the 50 Democrats and independents who caucus with them.
“I don’t think there’s going to be any enthusiasm on our side for a tax increase,” Senate Minority Leader Mitch McConnell, R-Ky., told reporters earlier this month. He has described Democrats’ developing infrastructure plan as a “Trojan horse” for tax increases.
Senate Budget Committee ranking member Lindsey Graham, R-S.C., also opposed hikes during the hearing Thursday. He argued the 2017 GOP tax law increased American business competitiveness.
Witnesses on Thursday included Abigail Disney, the granddaughter of Walt Disney Company co-founder Roy Disney and an advocate for higher taxes on the wealthy. She supported the new bills Sanders introduced Thursday.
Democrats will have to resolve differences within the party about how much to raise taxes. President Joe Biden has backed hiking the corporate rate to 28%, rather than returning it to 35%.
The president aims to tie tax increases to his economic recovery proposals, which he is expected to unveil in the coming weeks. Among other changes, Biden aims to restore the top income-tax rate to 39.6%.
The White House aims to pair the higher corporate tax rate with the infrastructure piece of his recovery package, a source familiar with the plans told CNBC. The administration hopes to include individual tax hikes and changes to carried-interest taxes in the part of the proposal which addresses education and labor policies.
— CNBC’s Ylan Mui contributed to this report