Should big corporations or the wealthy pay more taxes to repair the nation’s roads, bridges and other infrastructure? Or should consumers pay for the roads they use with a higher gasoline tax?
Democrats, who control the House of Representatives and have the power to block most legislation in the Senate, have very different ideas which could complicate efforts to reach an agreement with the White House on funding an ambitious infrastructure improvement plan.
Congressional leaders and President Donald Trump are expected to meet Wednesday to discuss ways to pay for a $2 trillion infrastructure plan.
Senate Minority Leader Chuck Schumer as well as dozens of House Democrats are advocating having the wealthy pay more. Ninety House Democrats are backing a proposal that would “ensure that the wealthiest Americans and profitable corporations ... pay their fair share for key investments moving forward.”
Schumer, a New York Democrat, “believes a wide range of revenue sources for a big, bold infrastructure bill should be considered, so long as it’s not financed on the backs of working-class families,” Justin Goodman, his spokesman, said.
“Ideas for such funding sources include, but are not limited to, the hundreds of billions of dollars in tax cuts recently given to the wealthiest Americans,” Goodman said. Other ideas he cited were raising the top individual tax rate and reinstating the alternative minimum tax for millionaires and billionaires to ensure the wealthiest Americans pay their fair share and don’t make the tax code any more regressive.
Other Democrats said those ideas were unrealistic in the current political climate.
“It’s a BS talking point for someone who doesn’t want to do the heavy lifting, which is we’ve got to push for some sort of user fee and real money,” said House Transportation and Infrastructure Committee Chairman Peter DeFazio.
The Oregon Democrat called the idea of rolling back the Trump-backed 2017 tax cuts “a great talking point for someone who doesn’t want to do anything before the next presidential election.”
DeFazio advocated increasing federal taxes on gasoline and diesel fuel, which have not gone up since 1993, and looking at the possibility of taxing vehicle miles driven. He’s open to other ideas as long as they also include federal spending to help infrastructure projects.
Raising motor fuel taxes has won substantial support from both Republicans and Democrats, and the White House will not rule it out.
Some Democrats, however, have been wary of raising such taxes, regarding them as regressive since the motor fuel tax takes a disproportionately bigger percentage from lower income households. But even those unenthusiastic about the gasoline tax, both liberals and conservatives, have conceded it may be the most effective way of raising infrastructure money.
Senate Democrats last year proposed an extensive infrastructure plan that would move the top individual income tax rate back to 39.6 percent. The Republican-led 2017 law lowered that tax rate to 37 percent, and cut the corporate tax rate to 21 percent from 25 percent.
Efforts to roll back any of the 2017 tax cuts have gone nowhere, as Trump and congressional Republicans regard the cuts as one of their signature achievements.
“There’s a better chance Sen. Schumer could win the Senate in Texas than there is of undoing the Trump tax cut. There is zero chance that proposal will be the funding mechanism,” said Rep. Mark Meadows, R-North Carolina, chairman of the ultra-conservative House Freedom Caucus.
Senate Majority Leader Mitch McConnell has flatly called the Schumer idea a “non-starter.”
“This tax bill is what’s generated a robust economy,” McConnell, a Kentucky Republican, said. “The last thing we want to do is step on all this growth.”
Advocates of higher taxes for the wealthy and corporations counter with this scenario: The House, which has a 235 to 197 Democratic majority, would pass an infrastructure plan with the tax increases for the wealthy. It then would go to the Senate, where the hope would be that reluctant Republicans would feel political pressure to support it.
“We believe that we can pass a solid infrastructure bill out of the House, and if the White House supports it I think there’ll be immense pressure on the U.S. Senate to do so as well,” said Rep. Ted Lieu of California, a leader of the House Democratic effort.
His view, though, was not widely shared by his colleagues.
House Budget Committee Chairman John Yarmuth, D-Kentucky, agreed that wealthy individuals and big companies should pay more.
But, he said, “you think the Republican Senate is going to go along with that? Not a chance.”