Senate Democrats proposed a $1 trillion infrastructure plan Wednesday, and they want to repeal parts of the Republican tax overhaul to pay for it. In what was likely a preview of a key Democratic theme for the upcoming congressional election in November, Senate Minority Leader Chuck Schumer (D-NY) said the proposal is designed to boost the middle class through domestic investment and job creation: “We believe overwhelmingly the American people will prefer building infrastructure and creating close to 15 million middle-class jobs than giving tax breaks for the wealthy,” he told The Washington Post.
The spending proposal includes:
- $140 billion for roads and bridges
- $115 billion for water and sewer infrastructure
- $80 billion to upgrade the energy grid
- $50 billion for schools
- $40 billion for high-speed internet
To raise revenue to offset the cost of the plan, Democrats propose to reverse significant elements of the Republican tax bill signed by President Trump in December. They would:
- Raise the corporate tax rate to 25 percent, up from 21 percent
- Raise the top individual tax rate to 39.6 percent, up from 37 percent
- Reduce the estate tax exemption from $11.2 million per person to $5.6 million, where it stood before the Republican tax overhaul
- Tax carried interest at ordinary rates rather than the lower capital gains rate
- Expand the alternative minimum tax (AMT)
The proposal leaves other parts of the new tax rules that Democrats have criticized intact, including the 20 percent tax deduction for pass-through businesses and the $10,000 limit on the state and local tax deductions.
Republicans quickly dismissed the proposal, with Senate Majority Leader Mitch McConnell (R-TN) saying, “Repeal all these bonuses, pay raises, new jobs, and new investments? Talk about a nonstarter.”
Political spin aside, The Wall Street Journal’s Richard Rubin largely agreed with McConnel’s prognosis for success given the current balance of power in Washington, tweeting, “This Democratic tax plan is going nowhere in 2018.”