In a memo, senior lawmakers also indicated that they plan to adjust the cap on how much taxpayers can deduct in state and local taxes, a provision that Mr. Biden did not originally include in his proposals, but one that remains a key priority for a number of lawmakers in high-tax states, particularly New York, New Jersey and California. (It will likely be a partial repeal, according to an aide familiar with the ongoing discussions.)
With an ongoing effort to get countries, including the United States, to adopt a global minimum tax of at least 15 percent, Democrats also hope to make significant changes to the international tax system to reduce incentives for companies to move their profits and operations abroad to tax havens. Lawmakers and aides have been discussing doubling the U.S. tax on foreign income to 21 percent.
After Republicans rejected beefing up the I.R.S.’s tax enforcement abilities as part of the bipartisan infrastructure package, Democrats are also likely to substantially bolster the tax collection agency’s staff and enforcement resources to help narrow the gap between what the federal government is owed in taxes and what it actually collects, which has reached an estimated $1 trillion per year.
