Top Ways and Means Democrat Suggests Openness to Further Raising Taxes

House Ways and Means Committee Chair Richard Neal (D-Mass.) told reporters on Aug. 12 as the House considered the $700 billion Inflation Reduction Act that Democrats would be open to further tweaking the tax code after November.

Specifically, Neal said that further tax code changes than those included in the Inflation Reduction Act would target high-income individuals and corporations.

“I do think that there’s a chance here to address some fundamental tax-reform issues,” Neal said.

The Inflation Reduction Act, a compromise reconciliation bill hammered out after months of negotiations between Sen. Joe Manchin (D-W. Va.) and Senate Majority Leader Chuck Schumer (D-N.Y.), made substantial changes to the tax code—but not nearly as substantial as some Democrats would have hoped for.

For instance, the Inflation Reduction Act held onto key provisions from the now-defunct $1.75 trillion Build Back Better Act (BBB).

Key among these changes is a new 15 percent minimum tax on the income of corporations who bring in more than $1 billion a year. Though the current federal tax rate on corporations is 21 percent, many mega-corporations ultimately end up paying less after exemptions, deductions, write-offs, and other tax code workarounds are taken into account.

Rather than using the traditional measure of taxable income to determine whether this rule applies to a corporation, the new tax would rely on what’s known as book income.

As opposed to taxable income, which takes into account deductions, exemptions, write-offs, and other elements of the tax laws, book income describes a figure shown to investors which tracks a company’s revenue before anything else is taken into account.  This, critics has warned, could be disastrous for investment, as it gives companies an incentive to reduce their book income and thus appear less profitable than they are in the eyes of would-be investors.

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