A drafted tax plan shows how Democrats want to raise $ 2.9 trillion from wealthy Americans and large corporations, reversing tax cuts during the Trump era

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House Ways and Means Chair Richard Neal and House Speaker Nancy Pelosi. Tom Williams / CQ-Roll Call, Inc. by Getty Images

House Democrats are ready to unveil a plan to return key parts of the tax law to Trump, each with a draft of the changes the Insider got.

The tax increase would raise $ 2.9 trillion in new revenue from wealthy Americans and big businesses.

The framework outlined the increase in the corporate tax rate included a new 3% “surtax” on wealthy Americans.

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House Democrats are ready to propose hitting big companies and the richest Americans with a spate of new tax increases that would collect $ 2.9 trillion in tax revenue to fund a broader social spending plan, according to in a draft proposal circulating among Democrats on the House Ways and Means Committee obtained by Insider.

America’s highest earners and largest companies will bring heavy tax increases, which have pushed back many of the provisions approved by President Donald Trump four years ago.

However, many of the increases are not as aggressive as originally laid out by President Joe Biden the first year in his push toward a fair tax system.

Someone familiar with the tax provisions confirmed its contents but was given anonymity because they could not speak publicly. A spokesman for the House Ways and Means Committee did not respond to a request for comment.

A measure hewed close to Biden’s plan: A 39.6% top tax rate on American individuals earning more than $ 400,000, and the same rate for couples earning more than $ 450,000 together.

Investors, however, won’t see a big hike because they fear: Unlike previous proposals that nearly double the tax rate on capital gains, House Democrats will raise the top rate of capital gains – which taxes income from assets such as stocks and bonds – up to only 25%. It currently sits at about 20% for the highest income of Americans.

Many of Americans ’richest incomes come from assets such as capital gains – not wages – that are taxed at a lower price than wages, according to the liberal -leaning Center on Budget and Progressive Priorities.

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However, rising capital gains seem to target a broader group and keep earners below $ 400,000, which is in line with Biden’s tax commitment. The White House previously said that the hike in profits more would only apply to individuals earning more than $ 1 million a year.

The latest plan will also impose a 3% “surtax” on people with adjusted total income of more than $ 5 million. Senator Elizabeth Warren has long pushed for a tax targeting the richest in America; his Ultra-Millionaire Tax Act would place a 2% tax on households with a net worth of $ 50 million to $ 1 billion. Households with a net worth of more than $ 1 billion will see a 3% tax. However, it is not clear how or if that “surtax” is in line with Warren’s and other progressives ’proposals for a direct wealth tax.

On the company side, Democrats are set to propose a 26.5% rate, an increase from the current level of 21% locked under tax law in the 2017 GOP. But it’s a smaller hike than Biden proposed and will only apply to companies earning more than $ 5 million. Other businesses with “income” of less than $ 400,000 will see their rate fall to 18%. Others will see that tax rates do not change.

The plan includes $ 80 billion in Biden’s funding over 10 years to strengthen IRS enforcement of America’s highest earners. Earlier this week, researchers at the Treasury Department discovered that the top 1% of earners evade approximately $ 163 billion in taxes per year.

Charles Rettig, the agency’s commissioner, said the tax gap – taxes owed but not collected – could be more than $ 1 trillion, more than the agency’s official estimate of $ 441 billion.

Biden’s funding will boost enforcement to the richest. In total, the number of agents engaged in working on sophisticated tax evasion enforcement has fallen by 35% in the last decade, according to the Treasury. The IRS budget fell 20%, while audits fell 42% from 2010 to 2017.

According to a White House fact sheet, there was an 80% decline in the audit rate for those earning more than $ 1 million a year from 2011 to 2018.

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