‘Everyone was caught by surprise’ – $60 billion sneaky tax hike in Covid relief bill

Yahoo News:

Democrats are getting an early start on their tax-increase agenda.

“Everybody was caught by surprise,” said a former Democratic aide. “They picked obscure items — things that were not on the radar.”

They’ve tucked a trio of little-noticed tax hikes on the wealthy and big corporations into their coronavirus relief package that together are worth $60 billion.

One takes away deductions for publicly traded companies that pay top employees more than $1 million. Another provision cracks down on how multinational corporations do their taxes. A third targets how owners of unincorporated businesses account for their losses.

It’s surprising because Democrats were widely expected to put off their tax-increase plans until later. Many lawmakers are wary of hiking them now, when the economy is still struggling with the coronavirus pandemic. If anything, when it came to their stimulus plan, Democrats were focused on cutting taxes, not increasing them.

But they ran into problems complying with the stringent budget rules surrounding so-called reconciliation measures like the coronavirus legislation — especially after some wanted to add provisions like one waiving taxes on unemployment benefits.

If Democrats exceeded their $1.9 trillion budget cap for the plan, they would lose the procedural protections that were used to shield the entire measure from a Republican filibuster in the Senate.

The tax increases Democrats picked to help keep their plan’s cost in check had the political benefit of being arcane. Unlike things like raising the corporate tax rate or upping the top marginal tax rate on the rich, the ones they chose won’t produce many headlines.

Brian FalerWed, March 10, 2021, 2:30 AM·5 min read

Democrats are getting an early start on their tax-increase agenda.

They’ve tucked a trio of little-noticed tax hikes on the wealthy and big corporations into their coronavirus relief package that together are worth $60 billion.

One takes away deductions for publicly traded companies that pay top employees more than $1 million. Another provision cracks down on how multinational corporations do their taxes. A third targets how owners of unincorporated businesses account for their losses.- ADVERTISEMENT -https://s.yimg.com/rq/darla/4-6-0/html/r-sf-flx.html

It’s surprising because Democrats were widely expected to put off their tax-increase plans until later. Many lawmakers are wary of hiking them now, when the economy is still struggling with the coronavirus pandemic. If anything, when it came to their stimulus plan, Democrats were focused on cutting taxes, not increasing them.

But they ran into problems complying with the stringent budget rules surrounding so-called reconciliation measures like the coronavirus legislation — especially after some wanted to add provisions like one waiving taxes on unemployment benefits.

If Democrats exceeded their $1.9 trillion budget cap for the plan, they would lose the procedural protections that were used to shield the entire measure from a Republican filibuster in the Senate.

The tax increases Democrats picked to help keep their plan’s cost in check had the political benefit of being arcane. Unlike things like raising the corporate tax rate or upping the top marginal tax rate on the rich, the ones they chose won’t produce many headlines.

They also fit Democrats’ themes of fighting inequality by forcing the well-to-do to pay more.

Since the provisions were added late in the legislative process, lobbyists didn’t have much time to rouse opposition to the plans.

“Everybody was caught by surprise,” said a former Democratic aide. “They picked obscure items — things that were not on the radar.”

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