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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

Sep 19, 2021 - Politics & Policy

Scoop - Manchin: Delay Biden plan to '22

Sen. Joe Manchin walks through the Capitol Visitor Center last week. Photo: Alex Wong/Getty Images

Sen. Joe Manchin (D-W.Va.) is privately saying he thinks Congress should take a “strategic pause” until 2022 before voting on President Biden’s $3.5 trillion social-spending package, people familiar with the matter tell Axios.

Why it matters: Manchin’s new timeline — if he insists on it — would disrupt the plans by House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.) to vote on the budget reconciliation package this month.

Pelosi's back-to-school math problem

Illustration: Sarah Grillo/Axios

House Speaker Nancy Pelosi (D-Calif.) may need votes from an unlikely source — the Republican Party — if she hopes to pass the bipartisan infrastructure bill by next Monday, as she's promised Democratic centrists.

Why it matters: With at least 20 progressives threatening to vote against the $1.2 trillion bipartisan bill, centrist members are banking on more than 10 Republicans to approve the bill.

By the numbers: Haitian emigration

Expand chart
Data: CBP; Chart: Sara Wise/Axios

The number of Haitians crossing the U.S.-Mexico border had been rising even before their country's president was assassinated in July and the island was struck by an earthquake a month later.

Why it matters: A spike during the past few weeks — leaving thousands waiting in a makeshift camp under a bridge in Del Rio, Texas — has prompted a crackdown and deportations by the Biden administration.