Battle Erupts Over Claim Manchin Bill Raises Middle-Class Taxes

William G. Gale, the co-director of the left-leaning Urban-Brookings Tax Policy Center, said in a blog post Tuesday that the precise way to divvy up corporate-tax burdens has been a longstanding debate among economists.

“The labor portion in JCT’s model is relatively small compared to the burden faced by shareholders,” he wrote. “But it’s enough to make the JCT distributional tables reflect tax increases among nearly all income groups in a bill where a corporate tax increase is the primary revenue source.”

Supporters of the draft moved to rebut the JCT analysis of the bill, which Democratic leaders are hoping could win passage this month. The draft has yet to win the endorsement of Senator Kyrsten Sinema, an Arizona Democrat whose vote is critical in the 50-50 upper chamber.

Debate Ensues

“It’s just completely false,” said Senate Finance Committee Chair Ron Wyden, an Oregon Democrat. “We have multibillion-dollar corporations paying less in their tax rate than nurses and firefighters.”

Brian Deese, a White House economic advisor, said Tuesday: “There are some corporations who will have to pay 15% in this context, but there aren’t going to be any individuals who will pay a higher tax rate as a result.” This relates to “common sense and who pays the tax,” he said in an interview with CNBC.

Treasury Secretary Janet Yellen weighed in as well, writing in a letter Tuesday to House Speaker Nancy Pelosi that the legislation won’t raise taxes on families earning less than $400,000 a year, which is “fully consistent with the President’s pledge.”

Republicans were quick to latch on to the JCT analysis in their blasting of the so-called reconciliation bill.

“If these taxes are passed, we’ll see higher inflation, more economic stagnation, lower wages, less employment, and most importantly, the burden will be paid by people making less than $400,000,” Senator Mike Crapo, the top Republican on the Senate Finance Committee, said in a statement.

Democrats are preparing to vote on the legislation either later this week or early next, but have a series of procedural hurdles. Those include getting more data from the Congressional Budget Office about the bill’s total cost, which could provide further fodder for partisan debate.

– With assistance from Naomi Jagoda and Christopher Condon.

Pictured: Sen. Joe Manchin. (Photo: F. Carter Smith/Bloomberg)