The Early 202: Why Wyden's tax proposals aren't bolder

Monday, December 13, 2021

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By <a href="mailto:Theodoric.Meyer@washpost.com">Theodoric Meyer</a> and <a href="mailto:Jacqueline.Alemany@washpost.com">Jacqueline Alemany</a>

By Theodoric Meyer and Jacqueline Alemany

with research by Tobi Raji

Good morning to no one except Tom Wambsgans. What are we missing out there? Let us know what you're hearing about what's happening in Congress, in the White House, on K Street and elsewhere: earlytips@washpost.com. Thanks for waking up with us.

On the Hill

Why Wyden's tax proposals aren't bolder

Senate Finance Committee Chair Ron Wyden (D-Ore.) only got some of what he wanted in terms of tax policy in President Biden's Build Back Better proposal. (REUTERS/Elizabeth Frantz)

The Senate payfors are here: Sen. Ron Wyden (D-Ore.), the chairman of the Senate Finance Committee, floated several transformational ideas in recent months for taxing corporations and the wealthy: a carbon tax, a proposal to close the carried-interest loophole and, most provocatively, his so-called billionaires income tax.

None of those ideas have made it into Democrats' social spending bill that is hung up in Congress.

Wyden debuted his committee's portion of Democrats' massive health care, child care and climate bill on Saturday without those proposals or others he'd floated, such as a new tax on executive compensation.

There are several reasons Wyden's boldest proposals never made it into Build Back Better, according to people with knowledge of the deliberations and Wyden himself.

Democrats don't need to raise as much revenue to pay for the bill's spending as they thought they would because Sen. Joe Manchin III (D-W.Va.) has refused to back a package as big as the one President Biden originally envisioned. And some of Wyden's proposals have the support of 49 Senate Democrats, but not the 50 votes needed to pass the bill under the chamber's reconciliation rules.

"I've put forward an extensive menu of revenue options that would have finally fixed our broken tax code," Wyden said in a statement to The Early. "For many of those options we are one vote short."

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Not ready for prime-time

Still, several Democrats congressional staffers expressed frustration to us that Wyden didn't mount a more sustained campaign for some of his proposals to back up his tax-the-rich rhetoric.

Steve Rosenthal, a longtime tax lawyer who's now a senior fellow at the nonpartisan Tax Policy Center, said the relatively late hour at which Wyden unveiled some of his proposals — he debuted the billionaires tax on Oct. 27 — didn't argue for inclusion.

"I admire Chairman Wyden for trying to tackle this difficult areas," he said. "He was ambitious. But I think they weren't ready for prime-time, especially the billionaires income tax. I think that he just got them out too late."

It's not the first time some of Wyden's most ambitious plans have sputtered. A 2014 story from our colleague Lori Montgomery on Wyden's struggles during his first stint as Finance Committee chairman began with this memorable sentence: "Sen. Wyden has so many knives in his back, it's a wonder he's still walking around upright."

Part of the reason it took so long to debut Wyden's billionaire income tax is its complexity, according to a person familiar with the matter. Wyden's staff has been working on the proposal since 2019; the legislative text runs to 107 pages.

Other Wyden proposals fell victim to the opposition of one or two Democratic senators.

Sen. Kyrsten Sinema (D-Ariz.), for instance, opposed Wyden's plans to go after the carried interest loophole, which lets the incomes of some hedge fund managers and venture capitalists be taxed at lower rates than they otherwise would, according to the person familiar with the matter. Sen. Jon Tester (D-Mont.) and Manchin both expressed skepticism about a carbon tax.

Bob Greenstein, a visiting fellow at the Brookings Institution and a former Carter administration official, said the BBB payfors reflect the bare margin "the Democrats have in Congress, being able to lose not a single vote in the Senate and no more than three in the House."

"If the Democrats, with their exceedingly narrow margins, do enact a package of these dimensions with all the offsets it contains, I'd regard that as pretty impressive," Greenstein wrote in an email to The Early.

Another chance?

The proposed taxes Wyden unveiled on Saturday hew closely to those passed last month in the House bill. Wyden coordinated closely with House Ways and Means Committee Chairman Richard Neal (D-Mass.) as the legislation was being drafted.

(One difference: New taxes on vaping raising $9 billion were cut from the bill after Sen. Catherine Cortez Masto (D-Nev.) expressed concern they could violate Biden's pledge not to hike taxes on anyone making less than $400,000 a year.)

The bill doesn't include changes to raise the cap on the state and local tax deduction that some Democratic lawmakers in New York and New Jersey have demanded but that Rep. Jared Golden (D-Maine) criticized last week as "reverse Robin Hood tax policy."

While the bill doesn't include some tax policies progressives want, it would accomplish much of the tax agenda Biden campaigned on last year, including a new minimum tax on U.S. companies' earnings abroad; a new alternative minimum tax on companies' "book income"; and new tax penalties "on corporations that ship jobs overseas in order to sell products back to America," as Biden's campaign put it.

The billionaires income tax might live to fight another day if it doesn't make it into this bill.

Wyden could push for the tax again next year as Democrats are searching for ways to pay for extending the child tax credit, according to the person familiar with the discussions. The current bill includes only a one-year extension of the credit and Biden has pledged to pay for any future extensions — which means Democrats are likely to be scrambling for revenue again next year.

And Wyden is still committed to taxing billionaires.

"I've said throughout this process that letting billionaires off the hook would be a bad move from both a political and policy perspective," he said in the statement.

"This isn't about punishing success, which is the talking point you'll hear from billionaires and their defenders," he went on. "This is about the simple proposition that the wealthiest people in the world should pay taxes every year like working people."

Steve Rosenthal of Tax Policy Center on Ron Wyden's tax pay-fors in BBB

"I admire Chairman Wyden for trying to tackle this difficult areas. He was ambitious. But I think they weren't ready for prime-time, especially the billionaires income tax. I think that he just got them out too late."

Jan. 6 panel set to vote on holding Meadows in contempt

Former White House Chief of Staff Mark Meadows speaks to the media at the White House in Washington, DC on October 21, 2020. (Photo by OLIVIER DOULIERY/AFP via Getty Images)

Brought to you by PowerPoint: The House committee investigating the Jan. 6 attack on the Capitol released a 51-page report Sunday that recommended holding former White House chief of staff Mark Meadows in contempt of Congress.

The report details questions about the documents provided — including 6,600 pages of records from personal email accounts and roughly 2,000 text messages.

Happening tonight: The panel is expected to vote to refer Meadows for criminal contempt of Congress. Then, the measure will get sent to the full House for a vote. If approved, the Justice Department will then decide whether to prosecute the charges.

TL;DR: The select committee said it wants to question Meadows about:

An email he sent saying the National Guard would "be present to 'protect pro Trump people' and that many more would be available on standby."
Text messages and emails he received about "efforts to encourage Republican legislators in certain States to send alternate slates of electors to Congress."
An email he sent suggesting that Vice President Mike Pence "could declare electoral votes in six States in dispute when they came up for a vote during the Joint Session of Congress."
Read the full contempt report here.

The committee's report comes on the heels of a 38-page PowerPoint presentation titled "Election Fraud, Foreign Interference & Options for 6 JAN" that was turned over by Meadows to the panel last week.

ICYMI: The presentation detailed how the Trump administration planned to overturn the results of the 2020 election, including sending U.S. marshals and National Guard troops to help "secure" and count paper ballots, our colleagues Emma Brown, Jon Swaine, Jacqueline Alemany, Josh Dawsey and Tom Hamburger report.

Phil Waldron, the retired U.S. Army colonel who circulated the PowerPoint, told our colleagues that he "visited the White House on multiple occasions after the election, spoke with President Donald Trump's chief of staff 'maybe eight to 10 times' and briefed several members of Congress on the eve of the Jan. 6 riot."

At the White House

The week ahead: Vice President Kamala Harris is set to announce a new electric vehicle charging initiative at an event in Maryland with Energy Secretary Jennifer Granholm and White House climate adviser Gina McCarthy, according to a White House official. The administration also plans to announce new investments in coal country and other communities that have seen historic disinvestment.