Democrats consider new taxes aimed at CEO pay, stock buybacks for
Senate Minority Leader Chuck Schumer (D-NY) speaks during a press conference on the coronavirus outbreak at the U.S. Capitol March 11, 2020 in Washington, DC. Schumer and other members of the Democratic caucus called for corporations and employers to offer paid sick leave to all employees following recommended health procedures. Also pictured (L-R) are Sen. Sherrod Brown (D-OH), Sen. Ben Cardin (D-MD), Sen. Ron Wyden (D-OR), Sen. Patty Murray (D-WA), Sen. Patrick Leahy (D-VT) and Sen. Mark Warner (D-VA).
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Congressional Democrats are weighing a raft of new taxes to help pay for their $3.5 trillion budget bill that would target corporate bigwigs and the nation’s largest companies that buy back shares.
On a discussion list of several new and expanded potential taxes is a proposal to impose an excise tax on publicly traded companies that repurchase a “significant” amount of stock.
The list, which was obtained by CNBC, also includes a tax on firms with CEO pay that exceeds a to-be-determined ratio to that of the company’s average worker.
A discussion list is a draft of ideas that lawmakers assemble before formally pitching them in the House or Senate. Members of Congress will often circulate a list to determine which, and how many, members of the caucus support aspects of the plan. As such, key details like the threshold at which certain taxes would apply and size of the payment have not yet been ironed out.
The Democrats’ plan also includes taxes related to carbon emissions which would likely be opposed by President Joe Biden and other moderate Democrats.
The proposed carbon taxes include a per-ton tax on the carbon dioxide content of leading fossil fuel producers upon extraction starting at $15 and escalating over time. Another suggests a per-ton tax on carbon emissions assessed on major industrial emitters, such as steel and cement makers. A third offers a simple, per-barrel tax on crude oil.
A related plan would repeal major tax subsidies for fossil fuels, including credits and accelerated deductions for extraction, preferential treatment of foreign income, and ability to avoid corporate income tax for pipeline companies.
But the would-be taxes aren’t exclusive to corporations.
The Democrats note that the current 37% top ordinary tax rate expires at the end of 2025, when it will return to its prior 39.6%. Their plan would hasten that timeline and reinstate the 39.6% in 2022.
The plan also seeks to address the long-criticized carried interest loophole by requiring fund managers to pay taxes annually at ordinary rates and subject to self-employment taxes.
Asset managers often get paid about 20% of profits accrued above a certain annual return, which can represent the majority of an individual’s income if their market bets led to significant gains. But that 20% commission is taxed at the capital gains rate of 20% — Democrats want to tax that income every year, realized or not, at…
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