(As prepared for delivery)
Pursuant to notice, we will now turn to consideration of our Budget Reconciliation Legislative recommendations relating to a variety of tax and health measures. This committee print is by far the most far reaching and voluminous of the recommendations we have considered during this reconciliation process. I am quite certain there will be spirited debate over the next two days that is commensurate with the historic magnitude of what we are undertaking. Put simply, these are investments that promise to shape the lives of Americans for the better for generations to come.
For starters, this proposal will make substantial investments in the development and deployment of clean energy to do our part in fighting the climate crisis while also creating good, well-paying jobs across the country.
Climate change is one of the most catastrophically dangerous challenges confronting our nation. It’s already causing increased wildfires, drought, flooding, and severe storms. If we don’t take bold action, these phenomena will only intensify in the coming years as the planet continues to warm.
Greener energy sources and job creation are just the start of our work to bolster the economy and strengthen communities.
The pandemic placed a tremendous strain on cities and states, making it extremely difficult for them to provide the critical services on which residents rely. In April of 2020, I joined the U.S. Conference of Mayors for a roundtable discussion, and heard directly from the mayors of Arlington, Texas, Dayton, Ohio, Columbia, South Carolina, Pittsburgh, Pennsylvania, and Santa Fe, New Mexico. They all had the same message: we need federal assistance to keep our cities afloat and to recover from this crisis.
The relief packages Congress passed over the last 18 months provided some crucial aid. But we can do more. The Build America Bonds and advanced refunding bonds in this proposal will help states pursue public-private partnerships and make new infrastructure investments.
As a former mayor myself, I know how impactful these financing tools can be in spurring development and creating more prosperous communities.
We also seek to expand proven tax credit programs that encourage affordable housing and economic investments in areas that are most in need.
Programs like the low-income housing tax credit, the New Markets Tax Credit, the Historic Tax Credit, and the new Neighborhood Homes tax credit are critical to attracting capital to underserved areas – especially for historically overlooked communities like our tribes and territories.
When combined, the whole of these credits is greater than the sum of their parts. This proposal ensures that every tax tool we have to benefit community members – and create good jobs – will work together more effectively across our entire country.
Over the past few months, we’ve seen a particularly powerful example of how the tax code can be used to benefit people’s lives. We expanded the Child Tax Credit in the American Rescue Plan, and provided it to families through monthly, advance payments that began in July.
That money allowed folks to keep a roof over their heads, to put food on the table, and to be able to pay for the diapers, medicine, and school supplies their kids need. It lifted millions of children out of poverty and pumped life into the economy as more people could afford to spend money again.
Today we are proposing to extend that expansion through the end of 2025 and to make the refundability of the credit permanent.
The American Rescue Plan also expanded the Earned Income Tax Credit and the child and dependent care tax credit, changes that further supported families and rewarded work. We will consider our plan to make those expansions permanent to provide Americans with greater stability and financial security.
Today isn’t just about financial health though, it’s also about investing in people’s physical health and ensuring they’re able to access the care they need.
Twelve states still have not expanded Medicaid under the Affordable Care Act, depriving more than 2 million people of access to health insurance and quality, affordable care. Politicians at the state level are unnecessarily preventing vulnerable individuals from gaining coverage for political reasons. We propose investments to finally close the coverage gap and provide these Americans – 60 percent of whom are Black, Latino, Asian or Pacific Islander – with meaningful health and economic gains.
The American Rescue Plan included expanded premium tax credits to lower health insurance costs, a change we now seek to make permanent.
We will also help people keep more of their hard-earned money in their pockets by reducing prescription drug costs. Americans pay significantly more for their medications than their counterparts in other, similar nations. That’s not fair.
Our proposal allows the Health and Human Services Secretary to negotiate lower prescription prices, providing people with tremendous savings.
Taken together, these investments will dramatically improve Americans’ ability to support themselves and their families; to stay healthy and access affordable care when they’re not; and to leave the planet a cleaner, better place for their children and grandchildren. I urge all of my colleagues to wholeheartedly embrace these proposals and the life-changing improvements they offer.
The measures we are considering today do a lot of good and they do it responsibly by raising the revenue needed to fund the programs we propose. We are unafraid to secure revenue when our priorities demand it, and our plan does so in a manner that is sustainable, economically rational, and equitable.
The individual income tax increases in this proposal come in the context of several decades of rising income and wealth inequality. And the tax system hasn’t done enough to stop it. Instead, our tax system has lost its progressive power at the top end because the wealthiest taxpayers get to play by different rules from ordinary wage earners.
We are taking a significant step toward leveling the playing field. Specifically, we propose to increase the top individual income tax rate to 39.6 percent, increase the top capital gains rate to 25 percent, and add a 3 percent surtax for individuals making over $5 million. The 199A deduction will be capped at $500,000, so that it can remain targeted at the small business owners it was originally intended for.
In line with the President’s pledge and our party’s values, we have ensured that none of these tax increases will affect households earning under $400,000.
Over the last few decades, the average American family has weathered multiple storms of financial crisis and economic uncertainty while the wealthiest among us have enjoyed relatively smooth sailing and the corporate sector saw boom times. This year, a record share of the S&P 500 companies beat their earnings estimates, and the market continues to set all-time highs.
We applaud these achievements. But it makes fundamental sense that these large, profitable corporations should help pay for the very infrastructure that makes their laudable success possible.
And so, the Committee’s proposal will raise the corporate tax rate to 26.5 percent, which I might note is still considerably lower than the 35 percent rate that was in effect before 2017.
Of course, the success of American corporations is due in no small part to their preeminence around the world. Our tax law plays a powerful role in shaping the global economy, and we want to continue promoting our companies’ global competitiveness without creating harmful incentives to move jobs or profits overseas.
To that end, I have celebrated Secretary Yellen’s success in negotiating the outline of a global minimum tax at the OECD. The international provisions of this subtitle will set a model for the kind of minimum tax that we expect our peer countries to adopt. We propose increasing the GILTI rate to meet or exceed the OECD threshold, rationalizing the BEAT so it only applies to companies that make base-eroding payments to low-tax jurisdictions, and cleaning up aspects of the TCJA that were confusing and frustrating for taxpayers, like the treatment of carryforwards and losses.
Finally, we take very seriously that no matter how well-designed our tax law is, it will mean little if the IRS doesn’t have the resources to enforce it. To that end, we propose a long-overdue investment in the technology and human capital needed for complex audits.
No one likes raising taxes, but thanks to the strength of our economy, we can afford it. But we cannot afford to skimp on the critical investments throughout this proposal. I urge you all to support these essential and responsible revenue provisions.
I now recognize the gentleman from Texas, Mr. Brady, for purposes of an opening statement.
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