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House Ways and Means Chairman Richard Neal (D-Mass.) Photo: Tom Williams/CQ Roll Call

House Democrats will consider as much as $2.9 trillion in tax hikes for the next 10 years — mostly on the extremely wealthy and corporate America — as they scramble for ways to pay for President Biden's $3.5 trillion infrastructure and social spending plan.

Why it matters: A draft proposal from the Ways and Means Committee, which ricocheted across Washington on Sunday night, previews epic fall fights between Democrats and some of the best-armed lobbies in America.

Driving the news: The summary, first reported by The Washington Post, includes a top personal rate of 39.6%, up from 37%, which would raise $170 billion over 10 years.

  • Democrats are looking to raise $1 trillion from the wealthiest Americans and $900 billion from corporate America.
  • While Biden has defined the “rich” as any individual or household that makes more than $400,000, the Democratic plan draws the line for individuals at $400,000; households at $425,000; and married couples at $450,000. 

By the numbers: The top capital gains rate would increase to 25% from 20% — raising some $123 billion.

  • Changes to what qualifies as investment income, some of which is already subject to a 3.8% Affordable Care Act tax, would make the effective capital gains rate 28.3%, raising $252 billion. 
  • Accelerating the end of the $24 million estate tax exemption would bring in another $50 billion.
  • Imposing an additional 3% tax on Americans who make more than $5 million would raise $127 billion.
  • Expanded restrictions on carried interest impacting how private equity firms compensate employees could bring another $14 billion.
  • The pharmaceutical industry could be forced to foot $700 billion of new spending by negotiating rates directly with Medicare.

Add these provisions and others up and you get to $2.9 trillion.

  • Then the plan counts $600 billion from so-called dynamic scoring, based on an assumption that the proposed policy changes will accelerate economic growth and therefore revenues. That's how Democrats could get to $3.5 trillion, at least on paper.

The big picture: While the menu gives Democratic lawmakers options, it also forces them to take sides on everything from a 3% surcharge on the uber-rich to a 26.5% corporate tax rate.

  • There's already a raging argument over the top line spending figure, with Sen. Joe Manchin (D-W.Va.) settling between $1 trillion and $1.5 trillion, and Sen. Bernie Sanders (I-Vt.) calling anything short of $3.5 “totally unacceptable.”
  • Substantive policy differences between the House and the Senate could become as important, with Sen. Mark Warner (D-Va.) threatening Sunday night to vote against the budget package over homeownership concerns.

Go deeper

Nov 30, 2021 - Politics & Policy

Congress sprints to meet crush of deadlines

Illustration: Aïda Amer/Axios

Congressional leaders have been pushing off vital action for months — and a lot of it will catch up with them in December, which begins Wednesday.

Driving the news: Funding for the federal government is set to expire at midnight on Friday. There are also consequential deadlines related to the debt limit, President Biden's agenda and annual actions like voting on the National Defense Authorization Act.

Spending on Cyber Monday falls 1.4%

Illustration: Shoshana Gordon/Axios

The verdict is in on Cyber Monday — the biggest online shopping day of the year — and consumers rendered a split decision. Spending for the day slid 1.4% versus 2020, according to the Adobe Digital Economy Index, as shoppers clicked less, but overall spending is up.

Why it matters: Supply chain disruption, pent-up pandemic demand and routines shaken up by remote work have all changed shopping habits. Industry observers say the way consumers shop now is another step in the transition to a new normal in retail.

The lawmakers playing up infrastructure the most

Expand chart
Data: Quorum; Chart: Kavya Beheraj/Axios

Both of the Democrats' vulnerable Arizona senators have been some of the most active lawmakers in hyping "infrastructure" in their press releases, newsletters, tweets and Facebook posts.

Why it matters: Democrats are hopeful their successes on roads, bridges — and, possibly, expanding the social safety net — will lessen losses they're expecting in the 2022 midterms. The social media activity has been tracked since President Biden signed the $1.2 trillion bipartisan infrastructure package into law.