Overnight On The Money — Senate Democrats lay out their tax plans

Happy Tuesday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: digital-staging.thehill.com/newsletter-signup.

Today’s Big Deal: Senate Democrats have made steps toward cementing the tax portions of Biden’s economic bill. We’ll also look at the latest on the broader infrastructure talks, the Fed’s push to restore its credibility and Manchin’s objection to a key provision of Biden’s agenda.

But first, some progress toward vaccinating youngsters.

For The Hill, I’m Sylvan Lane. Write me at slane@digital-staging.thehill.com or @SylvanLane. You can reach my colleagues on the Finance team Naomi Jagoda at njagoda@digital-staging.thehill.com or @NJagoda and Aris Folley at afolley@digital-staging.thehill.com or @ArisFolley.

Let’s get to it.

Senate Dems propose corporate minimum tax for spending package

 

Key senators on Tuesday released legislative text of a proposal for a minimum tax on corporate profits, which they are eyeing as a way to help pay for Democrats’ social-spending package.

• The proposal would create a 15 percent minimum tax on corporate profits as reported on financial statements.
• It would apply to about 200 companies with more than $1 billion in profits, according to a fact sheet from the senators.

The background: The proposal is aimed at preventing large corporations from paying zero in federal income taxes. According to the left-leaning Institute on Taxation and Economic Policy, at least 55 large U.S. corporations paid no federal income taxes in 2020, including FedEx and Nike.

“The most profitable corporations in the country are often the worst offenders when it comes to paying their fair share. Year after year they report record profits to shareholders and pay little to no taxes,” Senate Finance Committee Chairman Ron Wyden (D-Ore.) said in a statement.

And, it’s one of several proposals that Democrats are considering for the social-spending package in light of Sen. Kyrsten Sinema’s (D-Ariz.) objections to raising tax rates. 

“This proposal represents a commonsense step toward ensuring that highly profitable corporations — which sometimes can avoid the current corporate tax rate — pay a reasonable minimum corporate tax on their profits, just as everyday Arizonans and Arizona small businesses do,” Sinema tweeted.

Naomi breaks it down here.

Coming up: Wyden is expected to release a second tax proposal, to tax billionaires’ investment gains annually, later on Tuesday. Naomi will be staying up late to keep you posted — on her birthday no less!!! — so keep checking TheHill.com for the latest.

LEADING THE DAY

Dem hopes for infrastructure vote hit brick wall

Democratic leaders scrambling for an infrastructure vote this week to boost two Democratic gubernatorial candidates hit a brick wall on Tuesday, when the head of the Progressive Caucus said liberals will oppose the popular public works bill until a larger benefits package is finalized. 

Rep. Pramila Jayapal (D-Wash.) emerged from an hour-long meeting with Speaker Nancy Pelosi (D-Calif.) amplifying her long-held position: Progressives won’t support a bipartisan infrastructure bill, known as the BIF, before there’s agreement on every detail of the social spending package at the heart of President Biden’s domestic policy agenda. 

“Let’s vote both of them out at the same time, and I would even be willing to vote the BIF and then three hours later the reconciliation bill as long as we have full agreement from everybody — everyone on the House side, everyone on the Senate side,” Jayapal told reporters.

Why that is an issue: Jayapal’s entrenched position is a stark repudiation of those Democrats seeking a quick infrastructure vote whenever negotiators reach agreement on a “framework” governing the larger social spending bill. And it’s sure to aggravate those lawmakers arguing that a victory on infrastructure will lend a jolt of momentum before next week’s elections.

• Recent polls show both the New Jersey and Virginia gubernatorial races tightening, with Democrat Terry McAuliffe now essentially tied with Republican Glenn Youngkin in Virginia. 
• National Democratic leaders are increasingly worried that a Republican upset in either state would deflate the base, energize the right and cripple the agenda of Biden, whose approval numbers are already underwater.

Scott Wong and Mike Lillis explain here.

Read more on the push for a climate and social services bill:

• Disagreements among Democrats on several key issues, including ambitious proposals to expand Medicare benefits and lower the price of prescription drugs, are holding up a framework agreement on a major budget reconciliation package.

Senate Democrats working on the climate provisions of the budget reconciliation package think they have a path to a deal that will include a methane fee and believe they will get buy-in from centrist Sen. Joe Manchin (D-W.Va.).

BANK HOLIDAY

Manchin objects to IRS bank-reporting proposal

Sen. Joe Manchin (D-W.Va.) criticized a proposal to increase the amount of information the IRS receives about bank accounts, saying he thinks it is unlikely to be included in Democrats’ social spending package.

Democrats are considering the IRS bank-reporting proposal as a way to raise revenue to finance their social spending measure. It would require banks to report to the IRS the total amount of money that came in and out of an account during a year.

“I think that one’s going to be gone,” Manchin said at an event.

Read more here.

DON’T CALL IT A COMEBACK

Federal Reserve faces challenges to credibility

The Federal Reserve is attempting to tamp down two significant challenges to its credibility as both its handling of inflation and internal ethics face growing scrutiny. 

The central bank is quickly moving to address a scandal involving stock trades made by its top officials. And price increases are running higher and longer than many Fed officials expected, boosting pressure on the bank to slam the brakes on the recovery from the COVID-19 pandemic and back down from a new, more tolerant approach to inflation. 

Both could have deep implications for the Fed as a whole, as well as for Fed Chairman Jerome Powell’s future at the institution.

Read more here.

Good to Know

Senate Budget Committee Chairman Bernie Sanders (I-Vt.) said on Tuesday that a deal on President Biden’s spending bill must expand Medicare and include a plan to lower the cost of prescription drugs.

Here’s what else have our eye on:

• Senate Democrats are continuing to negotiate a proposal to provide workers paid family and medical leave in their massive spending plan after reports surfaced in recent days that Sen. Joe Manchin (D-W.Va.) opposes the measure.

Spanx founder Sara Blakely gave her employees two first-class plane tickets and $10,000 to spend on the trip to celebrate her company’s billion-dollar deal.

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.