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House Democrats Looking At How To Alter Tax Code To Fund Biden's Infrastructure Plan

ARI SHAPIRO, HOST:

Democrats want to roll back major elements of President Trump's 2017 tax cuts to pay for part of President Biden's $2 trillion infrastructure and stimulus plan. Before they try to do that, they are calling for a bipartisanship - they are calling for a bipartisan solution. Here's Richard Neal, the Democratic chairman of the tax writing Ways and Means Committee at a hearing this week.

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RICHARD NEAL: I'm eager, sincerely, to hear from our Republican colleagues on the infrastructure priorities that they've embraced and constructive proposals to build upon the committee's work.

SHAPIRO: Republicans are focused on doing all they can to stop Democrats from raising taxes. Here's freshman Byron Donalds of Florida.

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BYRON DONALDS: The Joe Biden tax plan is a tax plan that only China and Bernie Sanders would love.

SHAPIRO: To talk us through the upcoming fight over taxes and what it could mean politically, we're joined by NPR congressional correspondents Kelsey Snell and Susan Davis.

Good to have you both here.

SUSAN DAVIS, BYLINE: Hey, Ari.

KELSEY SNELL, BYLINE: Thanks for having us.

SHAPIRO: Kelsey, we just heard Chairman Neal say he wants bipartisan options. Are there really bipartisan solutions to raising the kind of money that Democrats need to pay for all their spending plans?

SNELL: To give people some context, the two plans that are kind of coming together here are the $2 trillion for the first infrastructure plan and another $1.8 trillion for the legislation that includes other things like child tax benefits and free pre-K and two years of free community college tuition. So the idea that they could get to a figure with bipartisan ideas alone is just, I don't know, basically impossible. There are some areas where they agree, and that's what Democrats wanted to focus on this week, but that's stuff like expanding access to some tax credits to build more affordable housing or to encourage investment in underdeveloped and low-income areas. And that is not going to get them very far with either plan. Democrats may be sincere in wanting to find agreement on those small-bore things, but that kind of ignores the bulk of what they're trying to do, which is raise taxes on the wealthy and corporations.

SHAPIRO: Some Republicans in the House voted against Trump's 2017 tax cuts. A small handful want to roll back a provision that caps how much state and local taxes an individual can deduct. Is there no hope for some bipartisan support here?

SNELL: There may be some bipartisan support for small things, but those are really minor portions of what Democrats have planned for the 2017 tax bill, which, like I said, is rolling back big portions. They want to return the top tax rate to 39.6 for people earning over $400,000 and raise the corporate tax rate from 21 to 28%.

Democrats are essentially arguing three points. One, polling shows that people generally want them to raise taxes on the rich and big companies. Two, Democrats campaigned on doing this, and they say that their voters expect and demand it. And the third thing they're saying is that tax hikes on the rich would pay for programs that benefit not just the poor, but, you know, suburban middle class people that Democrats have been really fighting to win over in recent years.

There's growing pressure from some Democrats, though, to just give up all of this bipartisanship talk and just kind of move on. Lloyd Doggett, who's a Democrat from Texas, cut through the kind of friendly bipartisan talk at that Ways and Means Committee hearing this week to say that it's useless to agree to fix roads and bridges if nobody talks about paying for it.

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LLOYD DOGGETT: I think those who think freeways are free or ignoring the reality of the need to finance the infrastructure that America needs to be more competitive.

SNELL: Democrats like him accuse Republicans of paying lip service to the idea of infrastructure without really going the whole distance.

SHAPIRO: Sue, raising taxes is historically a tough sell politically. Is there any hesitation among Democrats that raising taxes could hurt the president and the party?

DAVIS: There is, and especially if Republicans don't get on board for any tax increases, they're going to need profound Democratic unity. And at least one very critical Democrat here, West Virginia Senator Joe Manchin, a big swing vote in the Senate, has already made very clear he does not support raising the corporate tax rate. So Democrats are going to have to thread a needle in the Senate where they need to keep on board these sort of more moderate, business friendly Democrats. The White House and Democrats, for the most part, more broadly - I think Kelsey's right - they feel pretty confident that now is the right time politically to make this tax pitch. And I think it's for a couple of reasons.

Democrats see Republicans in a bit of a political bind right now. It's been much harder for them to be seen as this party of fiscal responsibility and restraint, because under President Trump, deficits went up, the spending went up. And they don't have a ton of credibility with voters right now in this moment. And they're also going through this identity crisis, right? They're trying to reimagine themselves as a more populist, working class party. So it's kind of hard to align that pitch with also being the party that's going to fight tooth and nail to protect corporate tax rates, even if that's exactly, you know, what they're trying to do. So it's just a bit of a trickier message for Republicans to land in this moment.

SHAPIRO: And so what are the Republicans planning to do here?

DAVIS: Well, we've seen a coalition of former Trump White House officials. They're launching a new advertising campaign against the Biden infrastructure plan. It's going to start next week and roll throughout the fall. They've been testing different ways to attack the plan. I spoke to Republican pollster Tony Fabrizio. He was Trump's pollster in 2020. He said they're going to pick apart things like Biden's support for electric cars, which they say would boost the China economy, where many of the batteries are made. Higher capital gains taxes on farmers polls pretty unpopular. And also the fact that Biden's plan calls for $80 billion in more funding for the IRS because it would increase enforcement and allow the government to collect more revenue. This is what Tony had to say about that.

TONY FABRIZIO: When you think about it from a political standpoint, probably the most hated federal agency and we're going to give it more money so it can hire more people to bother more taxpayers. I mean, that, like, violates politics 101 rules.

DAVIS: Former Trump official Mark Short also said they plan to target as many as 20 House seats and as many as six Senate races throughout the year. They still see taxes as a pretty potent issue and a lot of the suburban areas where they've lost some of that ground and where they're hoping to make up for it next year.

SHAPIRO: You know, Senate Republicans are also working a competing lane directly with the White House on a possible bipartisan infrastructure plan that is much smaller than what Biden has proposed. Kelsey, what's the status of that?

SNELL: Well, they're talking. They're trading ideas. But honestly, they're just really not in the same ballpark. Republicans are talking about $600 to $800 billion, and that one portion of Biden's plan is about $2 trillion. Those are completely different worlds of spending. So we're waiting to see more details of the counteroffers from Republicans and what the White House responds. But there is - it's all adding to this feeling on Capitol Hill that the bipartisan efforts are just a prelude to Democrats going it alone on this.

SHAPIRO: That's NPR's congressional correspondents Kelsey Snell and Susan Davis.

Thank you both.

DAVIS: You're welcome.

SNELL: Glad to be here. Transcript provided by NPR, Copyright NPR.