September 26, 2021

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‘Super Bowl of tax reform’: Groups gear up for fight over Biden plan to raise taxes on rich, corporations – CNBC

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President Joe Biden boards Air Force One as he departs Wilmington for return travel to Washington at New Castle Airport in New Castle, Delaware, U.S., March 17, 2021.

Kevin Lemarque | Reuters

Advocacy groups from across the political spectrum are preparing for an all-out war over President Joe Biden’s coming tax reform proposal, which is expected to include tax increases on wealthier families and corporations as part of his massive infrastructure plan.

It is shaping up to be the “Super Bowl of tax reform,” according to one person who is planning to join the fight. This person, who declined to be named in order to speak freely, expects a “protracted battle.”

These are some of the groups that will be involved in the fight, according to interviews with their leaders and representatives:

  • Americans for Prosperity, which is part of the Koch network
  • Americans for Tax Reform, a conservative group
  • Our Revolution, a progressive group that spun out of Sen. Bernie Sanders’ 2016 campaign
  • Americans for Tax Fairness
  • Progressive Change Campaign Committee
  • Patriotic Millionaires, a liberal group that aims to raise taxes on the rich

Biden has said since his campaign that he wants to raise taxes on those making over $400,000 a year, and that he wants to raise the corporate tax rate to 28% from 21%. The president also wants to tax long-term capital gains at the same rate as wages for households making more than $1 million a year.

Multiple reports indicate that Biden is considering using those tax increases to at least partially pay for the infrastructure package, which is expected to cost over $2 trillion.

Conservative and libertarian-leaning groups made the passing of former President Donald Trump’s tax plan a top priority at the start of that administration. All of the Senate Republican lawmakers voted yes on the 2017 bill, with the exception of then-Sen. John McCain, R-Ariz., who was absent due to his bout with cancer.

Now such groups, including the one backed by billionaire Charles Koch, are preparing to campaign against Biden’s tax reform proposal.

The plan on the right

The Koch network, through its Americans for Prosperity political advocacy arm, has made maintaining the Trump tax cuts part of its agenda under the new administration and Congress. Democrats also control the House and Senate, albeit by thin margins.

The group warns that a tax increase will strain a rebounding economy that took a bad hit due to the coronavirus pandemic.

“The Tax Cuts and Jobs Act was a tremendous win for the American people and helped them keep more of what they earn to put towards their families, businesses, and communities,” AFP President Tim Phillips told CNBC. “Clawing back those cuts or adding on new taxes would worsen our already devastated economy, hurt workers’ wages, crush small businesses, and ultimately wouldn’t come close to paying for the partisan wish lists President Biden and congressional leaders are proposing.”

The Trump tax cuts reduced the corporate rate from 35% to 21%.

A person familiar with the matter said AFP has already been engaging on taxes and other economic policies with the offices of lawmakers from both sides of the aisle. This person would not specify which offices.

One of the group’s digital ads simply calls for “no tax increases.”

Americans for Tax Reform, which was founded by anti-tax crusader Grover Norquist, for years has pushed back on any attempts to raise taxes. The group was a fierce advocate for Trump’s tax cuts, and it is already promoting through its website some of the ways it aims to attack Biden’s plan.

Norquist, the president of the group, told CNBC that Americans for Tax Reform plans to use national and regional op-eds to try to convince voters that the Biden tax plan would end up impacting their 401(k)s, utility bills and other personal items.

He hopes such an approach will pressure moderate Democrats to oppose or water down the tax proposals. Democrats hold a slim majority in the Senate, due to Vice President Kamala Harris’ tie-breaking vote.

“Our plans are a full court press to make it the most expensive vote,” Norquist said. “You want to make it so expensive politically so people will reduce the size and scope of the legislation.”

The campaign, he added, will move ahead “with the hope that you’ll do it so successfully that they say we’re not going to do it until next year, not this year.”

Norquist suggested that Sens. Catherine Cortez Masto, D-Nev., and Mark Kelly, D-Ariz., who are up for reelection in 2022, could feel pressure from his group’s effort. Representatives for Cortez Masto and Kelly did not return requests for comment.

Sen. Joe Manchin, D-W.Va., who is not up for reelection next year, said he supports a large scale infrastructure measure that he says should include raising the corporate tax rate to around 25%.

How the left will play it

On the other side of the aisle, progressive organizations see an opportunity to complete one of their top priorities: raising taxes on the rich. The struggles of working- and middle-class families during the pandemic show that it’s time to pass comprehensive tax reform targeting the wealthy, they argue.

Democratic lawmakers and liberal organizations who push for higher taxes on companies and the wealthy often cite opinion polls showing that many voters agree with them.

A 2020 Reuters/Ipsos poll said 64% strongly or somewhat agreed that “the very rich should contribute an extra share of their total wealth each year to support public programs.”

Our Revolution, a progressive organization run by Sanders, is planning an a widespread grassroots effort to persuade lawmakers from both parties to support raising taxes on the wealthy. Sanders, who calls himself a democratic socialist, for years has been calling on the wealthy to pay more in taxes. The Vermont senator, along with Democrats including Sen. Elizabeth Warren of Massachusetts, recently proposed a 3% total annual tax on wealth exceeding $1 billion.

Paco Fabian, director of campaigns at Our Revolution, said teams will be phone banking as part of this effort.

“Corporations and the wealthy need to pay their fair share. We have seen an incredible amount of pandemic profiteering while folks have been losing their jobs and their health care,” Fabian said in describing the message the group will convey to lawmakers during the outreach campaign.

The Progressive Change Campaign Committee, which has been aligned with Warren, said it will be active behind the scenes on the issue.

“For the Build Back Better debate, we’ll do things like polling, behind the scenes communicating with Democratic lawmakers and ensuring our national membership and the broader public are fully galvanized,” said Adam Green, a co-founder of the group, referring to the name Biden has given his infrastructure plan.

He said the organization plans to be in touch with the White House and members of the House and Senate.

Green said his group wants the White House to focus on raising taxes on the wealthiest Americans — but to avoid a gas tax.

“The best way for the White House to go bold and keep peace in the land on the taxation front is for them to focus on progressive taxes, namely on the rich and corporations, and not regressive policies like a gas tax,” he said.

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