“We reached an agreement on a framework, a menu of options, that will pay for any final negotiated [legislation],” Schumer told reporters.
But the reality was a bit more complicated, reflecting instead that talks continue on some of the thornier issues that come with updating the tax code. In some areas, Democrats have solidified common ground, such as raising the top rate on the wealthy earners to 39.6 percent from the current 37 percent. On others, like corporate tax increases, lawmakers want to raise rates but do not yet see eye to eye on the amount.
A Senate aide familiar with the matter, who spoke on the condition of anonymity to describe the delicate negotiations, confirmed the details Thursday. Internal talks continue on a wide array of additional increases, House and Senate aides said, including those targeting stock buybacks, capital gains and other measures that target wealthy executives.
House Ways and Means Committee Chairman Richard Neal (D-Mass.) told reporters that Democrats continue to haggle over several issues, including new carbon taxes, which have not yet been resolved. They so far have a “tentative” agreement on new bank-reporting requirements, he added, which could intensify federal investigations in pursuit of unpaid taxes.
But Neal said tax increases which target inheritances passed between generations, known as step-up in basis, is “not at the moment” part of the still forming menu of options for how to raise revenue. Other Democratic sources said that party lawmakers are still discussing other ways to tax these kinds of assets with some carveouts for farms.
Even by Thursday afternoon, many Democrats in the House and Senate said they had not even seen details of the tax framework, sparking a mix of confusion and frustration. Aides confided that they saw the announcement mostly as an attempt to project progress at a time when President Biden, Pelosi and Schumer have a heavy lift ahead of them to bring a $3.5 trillion tax-and-spending bill across the finish line. “I think there’s more work to do to flesh this out, but I think we’re making progress,” Senate Finance Committee Chairman Ron Wyden (D-Ore.) said Thursday.
The new tax details had arrived as Democrats scrambled to salvage their $3.5 trillion proposal from political collapse, as moderates and liberals within the party continued to duel over the size and scope of the package. Just a day ago, Biden huddled in private meetings with the warring factions within Capitol Hill, the first in what is expected to be a lengthy series of outreach efforts to secure his broader economic agenda.
House Democrats have already constructed an early version of their proposal, producing more than 2,600 pages of work over a week of marathon legislative sessions earlier this month. That included the House Ways and Means Committee, which put forward a slew of tax hikes they believe can raise over $2 trillion toward the final bill. That includes items such as a tax on cigarettes and nicotine, which remain part of the mix.
But Neal and Wyden at times have been at odds over their approach. Wyden, for instance, has sought to proffer significant changes to tax laws that govern foreign earnings, newly tax stock buybacks, and raise money from wealthy executives and investors that avoid individual tax rates. The items had been left out of the early House bill, setting the stage for talks between the two committees and administration officials, including Treasury Secretary Janet Yellen, this week.
Exiting those meetings, Neal and Wyden stressed their staffs continue to work toward a final menu of options that will be presented to Democrats in the days ahead. The exact revenue they raise, and how, hinges on the size of the final package, an issue Democrats have yet to resolve.