WASHINGTON — The Senate Finance Committee released an unfinished version of President Joe Biden’s tax plan as Democrats race to meet a year-end deadline to pass a roughly $2 trillion tax and spending bill.
The panel’s portion of the legislation released Saturday contains key elements of the bill, including an extension of the child-tax credit, roughly $1.5 trillion of tax increases on wealthy Americans and corporations and a drug price-reduction plan. The measure didn’t include the Senate’s plan to expand the state and local tax, or SALT, deduction, despite weeks of negotiations.
The legislation includes technical changes from the House version, as well as some policy changes, according to a statement from Senate Finance Committee Chairman Ron Wyden.
The draft is merely a placeholder version as Democrats squabble over key elements of the plan. The legislative text was released to give the parliamentarian a copy of the bill to review to make sure it complies with the chamber’s rules for advancing a fast-track reconciliation bill that can pass the 50-50 Senate with Democratic votes alone.
Senate Majority Leader Chuck Schumer says he wants to pass the bill by Christmas, a challenging timetable because the bill contains a number of unresolved policy issues, as well as several procedural hurdles.
“A number of my colleagues said they didn’t agree with what was passed by the House,” Wyden told reporters Thursday night. “So discussions are continuing.”
Senate Democrats say they want to make the SALT deduction more generous, but only for those making less than $1 million. The House-passed version of Biden’s Build Back Better bill included a measure to raise the cap on the write-off to $80,000 from $10,000.
Sens. Bernie Sanders, a Vermont independent, and Bob Menendez, a New Jersey Democrat, who have been leading the SALT negotiations, say the House approach is too generous. They are instead looking at limiting the tax break to those under a certain income threshold, but have yet to agree on what that should be.
Sanders wants a lower income level — about $400,000 — while Menendez is pushing for couples making just under $1 million to be able to claim the full break.
“We are making progress,” Menendez said Thursday, while declining to give specifics on the talks.
Democrats are also discussing tweaking the 15% corporate minimum levy on financial profits, also known as a minimum “book” tax. Lawmakers have raised concerns that the levy would diminish the value of other tax preferences, including credits for renewable energy investment and breaks for contributing to pension funds for workers.
The draft did make some changes to the House bill, including eliminating a tax on vaping products.
Wyden said he is continuing to talk to other Senate Democrats about the merits of a billionaire’s income tax, a levy on unrealized gains of the richest Americans. Wyden said that would address a gap in the legislation — and current law — where wealthy Americans can largely grow their fortunes tax free, because the Internal Revenue Service code focuses on taxing income, not unrealized capital gains.
Wyden said he is spending time this weekend trying to persuade his colleagues to include it in the final bill. The idea faced opposition from House Democrats, including House Ways and Means Chairman Richard Neal, who said he supported the proposal’s intent, but that the idea was too new to be added at the last minute.
Nearly 219 economists and professors sent a letter to Wyden and Schumer this week requesting they include the billionaires’ tax in the final version of the legislation. They said that failing to include it would “disappoint the millions of voters who support” Biden’s pledge to make the wealthy pay their fair share.
“The committee print is not the final version,” said Senator Elizabeth Warren, a Massachusetts Democrat. “It’s not over yet.”