The Congressional Hypocrisy Caucus Sanders and Warren negotiate a potential tax cut for themselves; a new analysis finds the House bill raises taxes on many middle-income earners. James Freeman
https://www.wsj.com/articles/the-congressional-hypocrisy-caucus-11636755206?mod=opinion_lead_pos11
The effort by congressional Democrats to shield themselves and their wealthy donors from tax hikes while inflicting them on the middle class appears to be more successful than previously reported. Even the left-leaning Tax Policy Center is blowing the whistle on this egregious gap between Democratic rhetoric and legislative reality.
As for rhetoric, this week in Baltimore the President continued making the claim he’s been making since he was a mere presidential candidate about his “Build Back Better” plan:
Nobody is going to — nobody is going to pay more — if you make less than 400 grand, you’re not going to pay anything more in taxes at all. Period. Guaranteed.
Howard Gleckman of the Tax Policy Center shares the outfit’s new estimate of a House draft of the plan:
Taking into account all major tax provisions, roughly 20 percent to 30 percent of middle-income households would pay more in taxes in 2022.
So much for a Biden guarantee. But there appears to be good news in the House draft for wealthy people who live in blue states—an increase to $80,000 from $10,000 in the amount of state and local taxes (SALT) that filers can deduct on their federal tax returns. Democrats are trying to sell this change as a benefit to the middle class, but the Tax Policy Center is among the many who aren’t buying it:
Despite what its promoters say, raising the cap to $80,000 would provide almost no benefit for middle-income households. It would reduce their 2021 taxes by an average of only $20. Even those making between $175,00 and $250,000 would get a tax cut of just over $400 or about 0.2 percent of after-tax income. By contrast, the higher SALT cap would boost after-tax incomes by 1.2 percent for those making between about $370,000 and $870,000 (the 95th to 99th percentile).
It seems the House’s big new tax break for the affluent in Democrat-run states won’t protect a lot of high-income earners from overall tax hikes. And for a large number of people who do not have high incomes, their tax bills will also be building back bigger. Mr. Gleckman writes that “when all major tax provisions of the BBB bill are included, every income group except those making about $28,000 or less would pay higher taxes on average in 2026 than under current law.”
Is the president aware that $28,000 is less than $400,000? It’s not entirely clear what he thinks on this topic. In his Baltimore remarks he also mentioned “the Build Back Better bill, which is not going to raise taxes one single cent. It’s totally paid for. Totally paid for by making taxes work for people who make over 400 grand and just do their fair share.”
In this latest rhetorical formulation, Mr. Biden seems to be trying to bundle all of his favorite false claims about the plan into one elegant package.
But of course whatever Mr. Biden and House Democrats want to do, all that’s needed to move Democratic rhetoric closer to reality is for just one Senate Democrat to refuse to vote for a package that includes an increase in the state and local tax deduction.
In a 50-50 Senate, only one of the so-called progressives is required to take this tax cut for the affluent off the table. Yet even lawmakers who seem to spend all day promoting new taxes on billionaires won’t rule out relief for millionaires like themselves.
Recently this column noted that Sen. Bernie Sanders, the Vermont socialist known for his scorched-earth assaults on businesses and billionaires, owns houses in jurisdictions with some of the nation’s heaviest property taxes. Coincidentally, the leftist firebrand has suddenly become open to reasonable compromise on this issue.
Naomi Jagoda reports in The Hill this week on a potential alternative to the House draft:
… Sens. Bernie Sanders (I-Vt.) and Bob Menendez (D-N.J.) said last week that they are developing a proposal that takes a different approach, keeping the cap at $10,000 and making it permanent, but including an exemption from the limit for taxpayers with income under a level between $400,000 and $550,000.
Sounds like Mr. Sanders may enjoy some protection from the tax hikes he’s about to impose on others.
Then there’s Sen. Elizabeth Warren (D., Mass.), who also enjoys a household net worth in the millions and lives in a state with high property taxes.
Last week Bloomberg’s Steven Dennis and Laura Davison reported:
Senator Elizabeth Warren said she isn’t yet sold on compromises offered so far — including one crafted by fellow progressive Senator Bernie Sanders — to partially restore the state and local tax deduction because of her concern billionaires could benefit.
“I didn’t come here to help billionaires cut their taxes,” the Massachusetts Democrat told reporters on Thursday. “I want to see what it does for the billionaires. I’m not here to help those guys.”
But is she there to help millionaires? The Bloomberg report adds:
Warren said a SALT modification “becomes much more attractive” if it is paired with Senate Finance Chairman Ron Wyden’s proposed billionaire tax, which would tax the unrealized capital gains of the very wealthy.
It sounds like there’s a deal to be had here. Ms. Warren appears to be willing to accept a tax cut for herself as long as she’s assured that she can raise taxes on other people. How magnanimous.
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