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Tax Hikes in House Version of Biden Plan Come to Nearly $1.48T, Panel Says

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What You Need to Know

  • Increasing the cap on state and local tax deductions to $72,500 from $10,00 would raise about $2 billion over a decade.
  • High-earners would pay $640.2 billion more in federal levies over the next 10 years, according to the estimates.

The House’s version of President Joe Biden’s signature social-spending bill raises nearly $1.48 trillion in new tax revenue, according to the Joint Committee on Taxation.

The money from tax increases on the wealthy and corporations falls short of the $1.75 trillion that Democrats say they want to spend on new social programs.

The estimate doesn’t include revenue from increasing Internal Revenue Service enforcement, which will be included in Congressional Budget Office projections later.

The White House expects it can raise an additional $400 billion over a decade by giving the IRS $80 billion in additional funding to increase audits and improve taxpayer compliance.

The JCT calculations also don’t include additional savings from a drug pricing deal that would allow the federal government to negotiate prescription prices. The White House estimates that would raise about $250 billion in additional savings to offset the cost of the plan.

Fiscally conservative Democrats have said they want to see analyses of the bill’s costs from both the JCT and the CBO before proceeding with a vote on the tax and spending measure.

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Speaker Nancy Pelosi, who is attempting to bring the legislation to the House floor this week, can afford only three defections if all Republicans, as expected, vote against the bill.

House Ways and Means Chairman Richard Neal has said the package would be fully paid for with taxes and other offsets, though the comprehensive estimate of the bill’s total spending and revenue offsets from the CBO hasn’t yet been published.

Increasing the cap on state and local tax deductions to $72,500 from $10,00 would raise about $2 billion over the decade because the limit on the write-offs would be in place through 2031. The $10,000 cap is scheduled under current law to expire at the end of 2025.

The plan includes $300.5 billion in energy-related tax incentives, including electric vehicle tax credits and preferences for renewable energy.

The legislation increases taxes on corporations and other large businesses by nearly $814 billion over the decade. High-earners would pay $640.2 billion more in federal levies over the next 10 years, according to the estimates.

(Photo: Al Drago/Bloomberg)

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