The architects of the package claim that the bill will eventually be paid for by increasing tax revenue. This dynamic scoring strategy will justify a portion of the high price tag. However, it has been criticized by both Democrats and Republicans for its method of paying legislation.However, investments like universal pre-kindergarten, child care assistance, and free community college won't pay off well for more than a decade. For the majority of the bill, top Democrats must offer more concrete ideas to counterbalance their spending through tax hikes and other policy changes. These are likely to result in savings within a short time.Here's what we have:Stop the Medicare rebate rule Democrats believe they can make as much as $180billion by rolling back a Trump-era pharmaceutical policy. Drugmakers may continue to provide money to pharmacies to ensure that their medications are placed on Medicare plans, if they can completely scrap Trump's rule.These rebates could be up to half of the drug's sticker price. Although they are not passed on to consumers directly, the insurers claim that they use savings to maintain low premiums.Some Republicans in Congress are warming to the idea that the former president's rebate policy could be scrapped and the prescription perks should continue.Mega IRAs: Democrats are shocked that so many Americans have IRAs in excess of $25 million and almost 30,000 have accounts worth $5 million or more. Many others, however, have very little or no retirement savings. Democrats believe that going after large retirement savings accounts could generate substantial revenue for the $3.5 billion plan. However, the exact number is not known.Restore the corporate rate. It is a known fact that Democrats will seek to undo the Republican cuts to the corporate tax rate. The question is how much. It's an easy and quick way to raise lots of money. Each percentage point increase generates approximately $100 billion.Biden would like to increase it to 28 percent from 21 percent at the moment, but that's likely too high for most Democrats. The most likely outcome is a rise to the mid-twenties rate, which Sen. Joe Manchin (D.W.Va.) supports. He has stated that he supports.Senator Joe Manchin, a key negotiator for the bipartisan infrastructure agreement stands outside the chamber while the Senate advances the $1 trillion infrastructure plan at Capitol July 30, 2021. | J. Scott Applewhite/AP PhotoPunish scammersAfter the Supreme Court voted against the agency's ability to return billions to victims of fraud over the past 40 years, a bill was passed by the House to give the Federal Trade Commission the power to crack down. The money would be sent to the Treasury if the FTC is unable to provide relief to consumers who have been harmed. The Congressional Budget Office estimates that millions of dollars will flow that way every year to the federal government each year.Senate leaders responsible for consumer protection are still working on their own bipartisan plan. Senator Maria Cantwell (D.Wash.), who heads the Commerce, Science and Transportation Committee, said that she hopes Congress will pass a final FTC fix before the $3.5 trillion plan goes into effect. If not, the grant of enforcement authority in the larger plan could offset the massive cost.Tap foreign profits Democrats are keen to increase hundreds of billions of dollar by also increasing taxes on large foreign profits. Some are seeking to tighten so-called GILTI rules that govern intangible income such as patents and intellectual property. They also want to repeal or modify the Base Erosion/Anti-Abuse tax. Depending on their actions, Democrats may end up raising more money here than with a corporate rate hike.Siphon off drug savings Senate Budget Chair Bernie Sanders, I-Vt., has estimated that they could get as much as $600 Billion from various policies to lower prescription drug costs. Medicare can negotiate prices with pharmaceutical companies, which would allow Medicare to offset the increased cost of expanding the program to include dental, hearing, and vision benefits.However, moderate Democrats and those who live in districts that are home to prescription drug companies like Senator Bob Menendez from New Jersey have raised concerns about potential impacts on drug research, innovation and development, which has complicated the caucus consensus.Increase the top tax rate. Many Democrats want to reverse the Republican cuts in the marginal income tax rate. Republicans cut it from 39.6 percent to 37 percent as part of their 2017 tax cuts. Democrats would like to return to 39.6 percent. This would be an easy task for majority party leaders who raised the rate to 39.5 percent in 2012 as part of a budget agreement.Reduce Medicare Advantage Lawmakers and other groups have suggested that cuts to Medicare Advantage could be made as a source of savings in the reconciliation bill. This could be in the form of a reduction to the benchmark rate at which the government pays private insurance companies to cover certain Medicare enrollees.Increase capital gains. Some Democrats are aiming to increase capital gains taxes. However, this will be more controversial when it comes down to a proposal that would end a long-standing provision in the code which allows people to leave assets to their heirs without paying capital gains taxes. Farmers, small businesses, and other stakeholders are giving Democrats a lot of attention.Biden wants people who make more than $1,000,000 to be subject to ordinary income tax on capital gains. The current top rate is 24 percent.Increase IRS enforcement. Spend money to make it happen. This is the exact approach Democrats are looking to adopt to combat tax fraudsters. In the hopes of increasing revenue through tax avoidance, the majority party would like to inject tens or billions of dollars into IRS's budget.President Joe Biden proposed a $80 billion increase in the tax collection agency. He estimated that this would generate $700 billion more revenue.As a way of paying for the bipartisan infrastructure plan, the idea of increasing IRS enforcement funding was being considered. Republicans rejected the idea last month. All of the savings will instead go to the $3.5 trillion plan Democrats are trying to pass.Democrats will have to face one problem when claiming savings: A rule that has been in place for two decades prevents legislators from paying for legislation using money raised through efforts such as IRS audits.This report was contributed by Caitlin Emma and Rachel Roubein. Sarah Owermohle. Natalie Fertig, Alice Miranda Ollstein, Caitlin Birnbaum, Sarah Owermohle.
