© Reuters. FILE PHOTO: The skyline of lower Manhattan is seen before sunrise in New York City, U.S., July 17, 2019. REUTERS/Brendan McDermid
By David Lawder and Richard Cowan
WASHINGTON (Reuters) -Leading Democrats in the U.S. House of Representatives on Monday proposed a substantial roll-back of former President Donald Trump’s tax cuts, including raising the top tax rate on corporations to 26.5% from the current 21%.
Democrats on the powerful House Ways and Means Committee said they will debate legislation this week that would achieve the changes as part of their broader, $3.5 trillion domestic investment plan.
In an attempt to finance the new spending, the Democratic-led committee will debate a proposal to raise $2.9 trillion in revenue over 10 years, according to a document circulated among members of the panel.
Besides increasing corporate taxes, wealthy individuals would see a jump in their income taxes as well as higher capital gains and estate taxes.
Even if the legislation as proposed passes Congress and is signed by Democratic President Joe Biden, corporate taxes would still be lower than they were before the enactment of the tax cuts pushed through by Republicans in 2017. But the top individual income tax rate would revert to its pre-2017 level.
The tax-writing Ways and Means Committee has scheduled work sessions for Tuesday and Wednesday to debate tax policy and other matters under its jurisdiction to be included in the $3.5 trillion “reconciliation” bill, which would require a simple majority to be passed in the Senate.
House Ways and Means Chairman Richard Neal will attempt to win the committee’s approval of the tax changes that are aimed at helping pay for expanded social services for the elderly and children and tackling climate change.
Neal, a Massachusetts representative, wants to set a graduated corporate tax rate of 18% on annual income below $400,000, 21% on income up to $5 million and 26.5% on income above $5 million.
The benefit of the graduated corporate rate would phase out for firms making more than $10 million.
Currently, the federal tax rate on corporations is 21%, down from the 35% rate that was in effect prior to the 2017 Republican tax restructuring. Biden had proposed raising the current corporate rate to 28%.
Neal’s plan would raise the top individual tax rate to 39.6% from 37% on taxable income above $400,000 for individuals and $450,000 for married couples. Those thresholds are below Biden’s proposed thresholds of $452,700 for individuals and $509,300 for married couples.
Republicans have been particularly critical of moves to increase estate taxes. The House Democrats’ plan would accelerate the expiration of Republicans’ temporary doubling of an exemption from those taxes to $24 million.
The exemption, which was passed in 2017, would expire at the end of 2021 instead of the end of 2025 under current law.
Neal’s proposal also would increase the capital gains tax rate for those with in