The new taxes and tax increases meant to pay for President Biden’s massive $1.75 trillion social spending bill would raise nearly $470 billion fewer than the White House claims — and won’t bring in enough to match the legislation’s total outlay, according to a new analysis from the University of Pennsylvania’s Wharton School of Business.
On Thursday, the Biden administration released the final framework of the Build Back Better package, along with how it expected to offset the cost of the measure.
But while the White House estimated that the new and higher levies would raise $1.995 trillion, Wharton’s Budget Model estimated that they would bring in $1.527 trillion — $468 billion below the White House figure and $223 billion short of the bill’s topline cost.
The biggest discrepancy comes in the administration’s plan to boost tax collection by the Internal Revenue Service (IRS). The White House framework estimates that would bring in $400 billion, but Wharton estimates a windfall for the government of just $190 billion — less than half of the administration’s figure.
The second biggest discrepancy between the White House and Wharton is regarding the 15 percent corporate minimum tax on companies that report earning income of more than $1 billion per year. The Biden administration estimated the tax would net the government $325 billion, but the Ivy Leaguers suggest it would be worth just $195 billion in revenue.
Similarly, the Wharton analysis finds that a higher tax rate on foreign earnings of companies that outsource American jobs would raise around $252 billion — far below the $350 billion projected by the administration.
The Wharton analysis also finds the White House oversold the amount that would be brought in from a 1 percent tax on corporate stock buybacks. The administration estimated it would raise $125 billion, while Wharton’s estimate said it would bring in just $50 billion.
Some revenue raisers are projected to bring in more money than the White House predicted. For example, the Wharton analysis finds that an AGI surcharge on the top 0.02 percent of wealthy Americans would raise $265 billion compared to the $230 billion estimated by the administration.
The repeal of the so-called “rebate rule” for prescription drugs would bring in an estimated $175 billion, according to Wharton, rather than the $145 billion estimated by the White House.
Biden announced what he called the “historic” framework from the White House East Room Thursday before jetting off to Europe for meetings with world leaders, including Pope Francis at the Vatican on Friday.
Democrats have struggled for weeks to finalize the bill, which they are attempting to ram through Congress without Republican support through the parliamentary maneuver of reconciliation.
It was not immediately clear whether the framework announced Thursday had the support of the two most prominent Democratic holdouts: Sens. Joe Manchin (D-W. Va.) and Kyrsten Sinema (D-Ariz.).
Manchin, who has previously insisted that any major spending legislation should be fully paid for, said in a statement that the framework was “the product of months of negotiations and input from all members of the Democratic Party who share a common goal to deliver for the American people.
“As we work through the text of the legislation I would hope all of us will continue to deal in good faith and do what is right for the future of the American people,” added Manchin, who stopped short of saying he would support the final bill.
Sinema sounded more hopeful in her statement, which read: “After months of productive, good-faith negotiations with President Biden and the White House, we have made significant progress on the proposed budget reconciliation package. I look forward to getting this done, expanding economic opportunities and helping everyday families get ahead.”
Meanwhile, a Senate-passed $1.2 trillion bipartisan infrastructure deal is languishing before the House as progressives threaten to vote it down if the social spending legislation is not approved first.