Wyden: Time for Congress to move on federal tax changes
U.S. Sen. Ron Wyden says people who work should not have to pay more in taxes than people who live off investments or profits from the sale of assets, such as stock.
As chairman of the Senate Finance Committee, the Oregon Democrat is drawing up plans to undo some of the changes that Republicans pushed through Congress when they overhauled the federal tax code in 2017. Those changes gave greater benefits to higher-income households and large corporations, and also cost the U.S. Treasury a projected $1.8 trillion over a decade.
"I am committed to ending the double standard in American taxes," Wyden said in an interview with Pamplin Media Group. "The working person — a firefighter or a nurse — pays taxes with every paycheck. The millionaires can defer, defer and defer taxes, and that's just not right. I'm going to change it.
"I also want to make it clear I share President Biden's determination to make sure that … any household under $400,000 is not going to pay more."
Wyden referred indirectly to news reports, among them one in June by ProPublica, which reported that some Americans paid little or no federal income taxes some years — among them Jeff Bezos and Elon Musk — based on data compiled by the Internal Revenue Service over 15 years. The Treasury Department says it's investigating the leak; tax data on individuals is confidential.
Some of Wyden's proposals, which he discussed in January as he became chairman of the tax-writing committee for the second time, dovetail with those put forth by Biden.
Biden had sought to raise more money for federal spending on public works projects, caregiving needs and other programs by raising taxes on higher-income households and large corporations. Republicans oppose the changes.
Both had sought to increase the top corporate tax rate, which the 2017 law reduced from 35% to 21%. Wyden has praised the 15% minimum tax on corporation profits that Biden has proposed as an alternative to raising the top corporate tax rate to 28%.
Both have proposed ending some tax breaks for capital gains, which are the profits from the sale of an asset such as stock held for at least one year. Current tax rates are up to 20%, depending on the size of the gain, a person's income tax bracket, and how long the asset is held. Biden has proposed doubling capital-gains taxes on investors making more than $1 million annually. Wyden has proposed to tax the top .3% of earners, based on at least $1 million in annual income or $10 million in assets for three straight years. There would be exceptions for farms, homes and retirement savings.
In contrast, Oregon law does not give special treatment to capital gains, which are subject to the highest state income tax rate of 9.9%.
Unlike the 2017 law, Wyden said, Democrats plan to spread out their changes over several bills.
"There are going to be several bills in this effort," he said. "The congressional leadership has been talking to me and others about how to structure it. Those are matters still to be resolved."
It's also likely that Democrats, who hold slim majorities in both houses of Congress, would have to pass the changes the same way Republicans did in 2017. That's under a parliamentary procedure known as budget reconciliation, which allows for approval by simple majorities, rather than 60 votes to avoid a filibuster in the Senate. The House has 220 Democrats — just two above the majority of 218 — and 211 Republicans; there are four vacancies. The Senate is tied 50-50; Vice President Kamala Harris is the tie-breaker for Democrats.
The key will be Democrats on the fence about raising specific taxes.
Wyden, at a Portland event Tuesday, June 29, also called attention to one of the tax changes included in Biden's pandemic recovery plan known as the American Rescue Plan. It raises the child tax credit to $3,000 per year for children ages 6 to 18 — and to $3,600 per year for children under age 6 — and converts it into a monthly payment from the Internal Revenue Service starting in July. So families do not have to wait until they file tax returns to receive money — and they get money back even if they do not owe taxes.
But there's a catch: the higher tax credit is in effect for just one year.
Wyden said he wants to make sure the change is permanent. The change is projected to cut the number of children living under the federal poverty level by 40%.
"Too often, families and individual workers with lower incomes, particularly Black and Latino, haven't had access to those full benefits," he said at a hearing of his committee on April 20.
"Those expansions are going to be game changers for those workers and families in Oregon and all across the country. They ought to be permanent, and I'm working with members of this committee to make that happen."
Energy: 44 to 3
One change Wyden has already advanced — it's pending a vote in the Senate, although Wyden said it may become part of the broader package of tax changes later this year — eliminates 44 energy-related tax breaks. That includes the much-debated oil and gas depletion allowance, which dates back to the start of the modern federal income tax in 1913.
Instead, there will be just three tax breaks: development of renewable sources; alternatives to gasoline and diesel as transportation fuels and energy efficiency.
Wyden said the changes are tied to reducing greenhouse gas emissions linked to climate change.
"The new lodestar will be reducing carbon emissions," Wyden said. "It's a free-market system. if you reduce carbon emissions, you will be able to get the credits."
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