Mar 29, 2021 - Politics & Policy

Scoop: Moderate Democrats buck Biden tax hikes

President Biden speaks at a podium with the presidential seal and flags in the background

Photo: Demetrius Freeman/The Washington Post via Getty Images

President Biden's plan to pay for his coming infrastructure package with big tax hikes already is meeting some resistance from moderate Democrats, a stumbling block for his progressive ambitions.

Why it matters: If this discomfort turns to outright opposition in the House and Senate, Biden will face a complicated path to cover more than $3 trillion he is expected to seek, in multiple proposals, for infrastructure as well as social welfare.

Between the lines: Two moderate Democratic senators — Joe Manchin of West Virginia and Kyrsten Sinema of Arizona — have drawn the most attention as potential obstacles to Biden's agenda. But the president also faces headwinds in the House of Representatives, where Speaker Pelosi can lose just three Democratic votes if Republicans are unified in opposition.

  • Over the past week, Axios has been interviewing moderate Democratic House members. Several are skeptical about Biden's tax-and-spend plans, and some were willing to say so on the record.

What they're saying: A leader of the House Democrats' moderate faction, Rep. Josh Gottheimer of New Jersey, said he worries about tax increases that could slow economic recovery and drive residents out of his state.

  • "We need to be careful not to do anything that's too big or too much in the middle of a pandemic and an economic crisis," he said.
  • While he wants to see the overall package before commenting on specific tax rates, he said, "It's got to be responsible and both parties need to be at the table. This can't just be jammed through without input and consideration from the other side."
  • Gottheimer, who co-chairs the bipartisan Problem Solvers Caucus, said he won't even consider Biden's tax proposals unless the president agrees to reinstate the State and Local Tax (SALT) deduction capped under former President Trump worth tens of billions every year. "Simply put," Gottheimer said, "no SALT, no dice."
  • Rep. Tom Suozzi (D-N.Y.) also told Axios: "I'm not voting for any changes in the tax code unless we reinstate SALT as part of the deal."

Another House Democratic moderate, Rep. Scott Peters of California, is more comfortable with a smaller tax hike for companies than the 28% in Biden's plans. He thinks "Republicans overshot" by cutting the top corporate tax rate from 35% to 21% in Trump's 2017 tax bill. "I think that 25% is fine," Peters said. "It doesn't disadvantage our companies, and in turn our employees, workers...I think 25% is the right spot."

White House press secretary Jen Psaki tells Axios: "We know there will be a range of views on how we get there, but we look forward to working with a broad coalition of members on the critical priorities of the president's plan: creating good jobs and making America more competitive — paid for without any tax increase on people making less than $400,000 a year."

The bottom line: In the 50-50 Senate, just one Democrat can hijack policy. Manchin has already suggested he wouldn't support a corporate tax rate of 28%.

Go deeper: Read Axios' Hans Nichols on how Biden faces Democratic pressure to cut taxes, too.

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