 Data: Tax Foundation; Chart: Will Chase/Axios Debates over tax increases, which lurked behind the scenes for most of the year, will burst into public this fall as President Biden's $3.5 trillion infrastructure plan moves toward final passage. - Why it matters: Biden promised new revenue to pay for historic spending increases in his second, "soft" infrastructure package. He needs tax increases to pick up votes from Joe Manchin (D-W.Va.) in the Senate and a handful of House centrists, who are concerned about adding even more to the national debt.
State of play: An increase in estate taxes now looks unlikely, sources tell Axios' Hans Nichols. - Instead, House and Senate committees are debating how much to raise capital gains and corporate taxes.
- The hikes would not apply to the $1.2 trillion bipartisan package for "hard" infrastructure like roads and bridges, which has already passed the Senate and awaits a vote by the House.
The fine print: One solution currently under discussion would be to raise the capital gains rate from 20% to 28% for high-income earners. A 3.8% Medicare surtax applies to both figures, raising the effective tax rate from 23.8% to 31.8%. - In addition, the general corporate rate would go from 21% to 25%, or even 26%.
- Taxes on companies' international earnings would rise from 10.5% to 15%.
- Those changes would generate close to $1 trillion over 10 years.
Between the lines: Those potential rates — 31.8%, 25% and 15% — are all lower than those Biden floated when he described how he'd pay for his "Build Back Better" agenda. - The package would dramatically expand the social safety net, creating new national programs that include universal preschool and free community college.
- Biden's earlier plan to tax capital gains like regular income, for a total effective rate of 43.4%, is all but dead, Axios is told.
What we're watching: One Democratic aide suggested the top-line rates could still increase. But they also could decrease, as well. - Raising the capital gains rate is facing the most internal opposition, and it could end up staying at its current 23.8%.
What's next: This structure would force corporations and the wealthiest Americans to foot the bill for the new spending. - That's sure to trigger a brutal lobbying campaign when Congress returns after Labor Day.
Go deeper: Biden's true tax priorities | 
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