Democrats had hoped to pay for much of their social policy and climate spending with by raising low capital gains tax rates for those earning at least $400,000, lifting the top personal income tax rate back to 39.6 percent from the 37 percent level that President Donald Trump secured in 2017, and increasing the corporate income tax rate from 22 percent to 25 percent or 26 percent. That corporate rate would still be far less than the 35 percent rate that Mr. Trump slashed, while the top personal rate would be back to where it was for most of the past 25 years.
But in the 50-50 Senate where all Republicans are opposed, they cannot afford to lose even one Democratic vote on the legislation, giving Ms. Sinema effective veto power over its contents.