Senate Democrats Agree On Tax Hike For Higher Earners
Senate Democrats reached an agreement to increase taxes on some high earners to collect funds to direct toward Medicare solvency in an indication of movement on a scaled-back version of President Joe Biden‘s social spending bill that was blocked last year by centrist Sen. Joe Manchin (D-West Virginia).
The proposed plan would apply to individuals who make upwards of $400,000 per year and couples that make a combined salary of $500,000 and above. These high earners would be required to pay 3.8% tax on earnings from “pass-through” businesses. Most businesses in the U.S. fall under that classification. Manchin has been working privately with Senate Majority Leader Chuck Schumer (D-New York) to come to an agreement on both Medicare solvency and lowering the price of prescription drugs.
Projections indicate the move would raise around $203 billion in 10 years’ time. Without Congressional action, the Medicare fund would begin running dry in five or six years.
Congressional Democrats are rushing to pass last-minute items before likely losing the majority in the House and possibly losing seats in the already evenly split Senate as a result of the midterm elections in November. To pass the package, they will utilize a procedure called reconciliation to bypass the Senate’s 60-vote threshold needed to avoid the filibuster. It will allow them to pass the Medicare solvency package with a simple majority with Vice President Kamala Harris serving as the tie-breaker.
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Senate Minority Leader Mitch McConnell (R-Kentucky) warned that the revival of the Democrats’ spending bill could make inflation jump even higher, as Biden’s approval ratings continue to plummet in large part due to the state of the economy.
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