House Democrats Ready Taxes on E-Cigarettes and Cryptocurrency
Congressional plan would raise taxes, but by less than Biden proposed. After a monthlong summer break, the Senate is back in session starting today—and ready to quickly remind us why we wish they would stay on hiatus. On the agenda: raising the debt limit, passing a $550 billion infrastructure bill, and fleshing out President Joe Biden’s $3.5 trillion budget package. Meanwhile, House Democrats are circulating a new plan to raise taxes in a variety of ways.
This includes a massive tax boost on nicotine-containing products, including vape products, and changing the tax rules regarding cryptocurrency to “treat cryptocurrency the same as other financial instruments.” Dems allege that they will raise $16 billion from the cryptocurrency rule change and nearly $100 billion from the nicotine taxes.
“In fact, evidence shows that the only impact cigarette tax increases have is to lead to a boom for criminal syndicates selling illicit black market tobacco products,” notes Americans for Tax Reform (ATR). “As a result, tobacco tax increases almost never reach the projected revenue goals: Only three out of 32 state tobacco increases studied met tax revenue estimates.” Meanwhile, raising taxes on vape products may hinder people’s efforts to quit smoking regular cigarettes.
The proposal—passed around Sunday by House Ways and Means Committee Chair Rep. Richard E. Neal (D–Mass.) and obtained by The Washington Post—would also:
• Raise taxes on big businesses—boosting the corporate tax rate from 21 percent up to 26.5 percent for companies with more than $5 million in annual income—while lowering taxes on small businesses. For companies making under $400,000 in annual income, the tax rate would go down from 21 percent to 18 percent. The proposal wouldn’t change the tax rate for companies making between $400,000 and $5 million.
• Raise taxes on high-income households, increasing the personal income tax rate from 37 percent to 39.6 percent. (The Post says this would apply to those making more than $435,000, while The New York Times reports that it would be raised for households that bring in more than $450,000 in income and individuals making more than $400,000.)
• Raise the capital gains tax (which applies to the selling of assets) to 25 percent, up from 20 percent.
• Impose an extra 3 percent “surtax on high-income individuals” with incomes over $5 million.
• Give the IRS an additional $80 billion over the next decade for enforcement. (This “would hire enough new IRS agents to fill Nationals Park twice” and “allow the IRS to audit and harass small businesses and American
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