Senator Bernie Sanders, I-Vt., Is seen outside the Chamber as the Senate debates the coronavirus aid package on Friday, March 5, 2021.
Tom Williams | CQ Appeal, Inc. | Getty Images
Senator Bernie Sanders on Thursday proposed new tax hikes for corporations and the richest Americans to both reduce inequality and fund sweeping government programs.
An independent Vermonter plan would raise the corporate tax rate to 35% and discourage companies from taking profits offshore to pay less. Republicans cut the tax rate from 35% to 21% under their 2017 tax bill.
The other proposal from the chairman of the Senate Budgets Committee aims to get the richest Americans to pay more. A progressive estate tax will be introduced starting with a levy of 45% on estates valued at $ 3.5 million to $ 10 million. For properties valued at over $ 1 billion, it would go up to 65%.
“We have tax legislation that allows the very, very richest people in America and the largest corporations to avoid paying their tax portion. That has to change,” Sanders said Thursday at a hearing of the budget committee.
NPR first reported on Sanders’ tax plans. Sens. Kirsten Gillibrand, DN.Y., Sheldon Whitehouse and Jack Reed, DR.I., and Chris Van Hollen, D-Md., Jointly sponsored the estate tax plan. Rep. Jimmy Gomez, D-Calif., Will introduce a version of the bill in the House, while Rep. Jan Schakowsky, D-Ill., Will present the corporate tax plan.
Sanders proposed the bills the day he chaired a hearing pushing for higher taxes for the rich and corporate. Sanders, who has long “manipulated” a system in favor of the rich and powerful, is now on a broader platform with a committee hammer and tight Senate democratic scrutiny.
Read more about CNBC’s political coverage:
The focus on wealth redistribution lies in concerns about a recovery from the coronavirus-induced economic crash that has boosted the highest earners more than the working class. Democrats plan to pursue mammoth laws to not only strengthen the country’s infrastructure and combat climate change, but also prop up the social safety net with expanded paid vacation and pre-K programs.
Sanders and Democrats face a difficult road to getting tax hikes into effect. Republicans in the Senate are likely to speak out against increases, which means Democrats may have to pursue legislation through budget voting that would only require the support of the 50 Democrats and Independents who meet them.
“I don’t think we’re going to get excited about a tax hike,” Senate Minority Chairman Mitch McConnell, R-Ky., Told reporters earlier this month. He has described the Democrats’ evolving infrastructure plan as a “Trojan horse” for tax hikes.
Senior Senate Budget Committee member Lindsey Graham, RS.C., also spoke out against walking during Thursday’s hearing. He argued that the 2017 GOP tax law made American businesses more competitive.
Witnesses on Thursday included Abigail Disney, granddaughter of Walt Disney Company co-founder Roy Disney and an advocate of higher taxes for the rich. She supported the new bills that Sanders introduced on Thursday.
Democrats need to resolve differences within the party about how much tax to collect. President Joe Biden has endorsed raising the corporate rate to 28% instead of returning it to 35%.
The president intends to tie tax hikes to his economic recovery proposals, which he is expected to release in the coming weeks. Among other things, Biden is aiming to restore the top tax rate to 39.6%.
The White House intends to combine the higher corporate tax rate with the infrastructure element of its redevelopment package, a source familiar with the plans, CNBC said. The administration hopes to include individual tax increases and changes in interest taxes in the part of the proposal dealing with education and labor policy.
– CNBC’s Ylan Mui contributed to this report.
Subscribe to CNBC on YouTube.