“I know about as much about it as you’ve said just now. I certainly would be open to taking a look at it and see if it’s fair,” said Sen. Jon Tester (D-Mont.) when asked about the proposed billionaire tax. “My concern is that … we’re probably looking at things that are far more painful because of things that have been taken off the table.”
The lanky and affable Wyden is hoping to quell that type of talk by Wednesday, when he’s planning to release the text of his proposal to a divided Democratic Party exhausted by a string of blown deadlines for a deal. Even then, the House is likely to stand behind its financing package that got committee approval nearly two months ago. It’s a burgeoning standoff that threatens to hold up progress on finalizing President Joe Biden’s domestic agenda this week.
For the moment, Democratic aides described lawmakers as anxious to see Wyden’s final product after more than two years of talk. Wyden said Tuesday that he’s spoken with Sinema about his plan and seemed unbothered by the arrows he’s taking from Neal and other Ways and Means members. As Wyden sees it, House colleagues have talked a good game about taxing the wealthy but only his idea would get at the assets of billionaires who don’t pay income taxes.
Billionaires “don’t take a wage. When the House talks about various approaches to raise taxes on adjusted gross income or something of that nature, the fact is that unless you try an approach like ours, you’re not going to get billionaires paying taxes,” Wyden said.
Wyden is a unique fixture of Congress, youthful enough to get away with wearing “Rip City” hats to Senate votes to celebrate his beloved Portland Trail Blazers. He’s a House veteran himself, serving across the Capitol from 1981 until 1996 before winning an Oregon Senate seat.
And despite his upbeat air, he’s no stranger to battles with his own party. In 2014 he struggled to pass plans to fund transportation and fix Medicare doctors’ payments, then a year later cut a trade deal over the objections of progressives, including then-Democratic leader Harry Reid of Nevada.
After six years in the minority, the Finance chair is now under pressure to put up a tax proposal that targets the wealthy but doesn’t cross Sinema’s red lines. And it might satisfy Sinema because it targets fewer of her constituents for tax increases than a straight-up higher income tax rate.
There’s a lot riding on his work: If his proposal to tax billionaires’ unrealized assets falls through, Democrats may end months of talks on social spending with no significant reforms to target the wealthy through the tax code.
That would prove a significant letdown for a party that’s built its platform around soaking the rich for years, even more so after former President Donald Trump cut taxes in 2017. Since that time, Wyden’s been on the leading edge of the billionaire tax, also called mark-to-market for the way it values assets that have not been sold.
Even if Wyden’s plan is enacted, it will almost certainly face legal challenges; Sen. Mitt Romney (R-Utah) argued “It’s probably unconstitutional.” Sen. Ben Cardin (D-Md.) acknowledged the circumstances impose “more pressure to get this one right.”
“Obviously, the areas have been narrowed to make it challenging for the Finance Committee to draft effective statutes. Dealing with mark-to-market issues is a tough drafting assignment under any circumstance. But Sen. Wyden has been working on this for a long time,” Cardin said.
That’s little consolation to House members who assembled a $3.5 trillion financing package in September for the party’s social spending and climate ambitions. Neal has repeatedly raised concerns about not seeing language from Wyden and said Tuesday that paying for the bill “looks harder to me every day without the Ways and Means package.”
Without legislative language for Wyden’s plan, negotiators cannot get an official score to know how much money the provision would raise — a key roadblock to securing a deal under the current time constraints, according to House Democrats. Senate Democrats believe Wyden’s tax will raise several hundred billion dollars.
Privately, Neal and other House Democrats are fuming about the latest turn in the negotiations.
The two tax chairs have never had a close working relationship, with Neal mostly taking an indifferent posture toward his former House colleague, according to several Democrats. But in recent days Neal has grown furious as his panel’s work gets tossed aside for an idea that he and other Democrats see as complicated and undeveloped.
“We have to be polite to our Senate friends, but I think we feel that we’re way ahead of the Senate in terms of having thought through all the revenue measures,” said Rep. Don Beyer (D-Va.).
Likewise, Senate Democrats say House members don’t understand the math senators face. If Sinema won’t raise rates, they say Wyden has to do something to maneuver around her position and still deliver on the party’s promises.
“We just need to find pay-fors you can get 50 Democrats to agree on,” said Sen. Tim Kaine (D-Va.).
Sen. Mark Warner (D-Va.) raised concerns about the proposal at Democrats’ lunch on Tuesday, according to Sen. Tammy Duckworth (D-Ill.), who recalled that Warner told colleagues: “We need to understand the numbers better.”
Tensions between the House and Senate are nothing new, but the party finds itself in a singular pressure cooker this week. Biden is heading overseas, two gubernatorial contests loom next week and the Senate’s bipartisan infrastructure bill has been stuck in the House for nearly three months.
A quick deal could change all that, but there’s no guarantee Wyden’s proposal is going to work for everyone or move quickly. To many Democratic lawmakers, taxing unrealized assets of a specific class of wealthy people is a new concept that deserves scrutiny.
“There’s a bunch of work that has to take place in fairly short order, and I think it’s totally appropriate that senators should want to kick the tires,” said Sen. Sheldon Whitehouse (D-R.I.). “The House has an important role, looking over our shoulder if they’re going to be asked to vote on it.”
Wyden said no senators have objected to targeting billionaires thus far and Kaine said he hasn’t heard “any griping” about the specific proposal. Cardin said if a deal on Biden’s social spending plan is reached this week, “I think it will be in there.”
For Wyden, that would be a huge victory given the scrutiny he’s received this week. And for his party, including the tax would finally follow through on an unfulfilled process to target the wealthy more specifically.
“More and more senators heard that the billionaires made something like $2 trillion during the pandemic,” Wyden said. “You’ve got to get at the core issue of billionaires.”
Bernie Becker contributed to this report.
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