Tax Hikes: House Democrats unveiled a sweeping proposal for tax hikes on big corporations and the wealthy to fund President Joe Biden’s $3.5 trillion rebuilding plan. Here’s what both sides are saying. To have stories like this and more delivered directly to your inbox, be sure to sign up for our newsletter. Image Credit: Gage Skidmore (CC 2.0)
Top Story: Tax Hikes
House Democrats unveiled a sweeping proposal for tax hikes on big corporations and the wealthy to fund President Joe Biden’s $3.5 trillion rebuilding plan, Lisa Mascaro and Marcy Gordon write for the Associated Press. “The proposed top tax rate would revert to 39.6% on individuals earning more than $400,000, or $450,000 for couples, and there would be a 3% tax on wealthier Americans with adjusted income beyond $5 million a year. For big businesses, the proposal would lift the corporate tax rate from 21% to 26.5% on incomes beyond $5 million, slightly less than the 28% rate the president had sought.” Top earners in New York City could face a combined city, state, and federal income tax rate of 61.2%, Robert Frank adds for CNBC. On the West Coast, some of the wealthiest Californians would face a combined marginal rate of 59.7%. Here’s what both sides are saying about the House plan, which is still just a proposal and subject to change:
On The Left
Left-leaning commentators believe House Democrats capitulated to the more moderate wing of the party in order to give the proposal a better chance of passing. Because the final legislation could change, some believe modifications should be considered to make the uber-wealthy pay their fair share.
“Courting moderates, House Democrats stop short of proposing the most aggressive plans to tax the rich.”Jonathan Weisman, New York Times: “House Democrats’ plans to raise taxes on the rich and on profitable corporations stop well short of the grand proposals many in the party once envisioned … [For example], the Senate Finance Committee wants to tax [stocks, bonds, and real estate] with a one-time surtax imposed on billionaires’ fortunes, followed by levies annually on the gains in value of billionaire assets, the way property taxes are adjusted each year to reflect gains in housing values. The Ways and Means Committee shrugged that off. … The House proposal would [also] force Wall Street financiers to hold their clients’ investment gains for five years before claiming them as capital gains and cashing out, a demand that could limit the use of carried interest, but would save a fraction of the Senate proposal, $14 billion. … [Ultimately], the House [was] influenced more by the need to win the votes of moderate Democrats than by progressive Democratic ambitions.”
“House Tax Proposal Fails to Make Billionaires Pay Their Fair Share” Chuck Collins, Sarah Anderson, Common Dreams: The proposal “honors President Biden’s commitment to only raise taxes on people making more than $400,000 per year. But House Democratic tax writers do not go far enough to raise revenue or reduce extreme wealth inequality. … Here are several [provisions] that should be included: End the preferential tax rate for capital gains income for investors making over $1 million per year. … End the ‘Carried Interest’ loophole that enables private equity fund managers to miscategorize their taxable wage income as capital gain income for tax purposes. … Eliminate the ‘stepped up basis’ loophole that allows the heirs of billionaires to inherit vast sums of money and property tax free. … Eliminate the Jeffrey Epstein GRAT loopholes the wealthy deploy to avoid estate taxes, including the Grantor Retained Annuity Trust (GRAT) loophole. … Incorporate tax reforms to curb excessive CEO pay. … [and] Eliminate Fossil Fuel Subsidies.”
“Let’s stop pretending Biden’s proposed tax increases on the rich are radical” Paul Waldman and Greg Sargent, Washington Post Opinion: “… there’s nothing radical about the tax changes Democrats are proposing … Looking at individuals, you have to ask: Who will have their lives upended by these measures? Billionaire investors? Wealthy tax cheats? Corporations that might find it a little harder to move money around to foreign subsidiaries? Trust us, they’ll be fine. … The bigger picture is that the 2017 tax cut was the capstone of a period of relentless tax-cutting for the wealthy and corporations dating back to the 1980s. In 1980, the top marginal income tax rate was 70 percent, about twice what it is now, and if anything, the rich spent less time whining about how oppressed they were by taxes than they do today. That period of tax-cutting was a real revolution; what Democrats are attempting now is little more than a modest recalibration. But even that is too much for some people to take.”
On The Right
Right-leaning commentators and outlets believe Biden’s tax bill will hurt the middle class the most. They also believe small businesses are in the crosshairs and, if passed, these new levies will make the US less competitive for large corporations.
“Here Comes the Biden Tax Bill” Editorial Board, Wall Street Journal: “As a share of GDP, the House proposal is still the largest tax increase since 1968. … If Americans are successful, Democrats want to tax more of their income. … The higher tax rate will kick in at a mere $400,000 for individuals and $450,000 for married couples. That’s down from $523,600 and $628,300 under current law. … This is a steep rate increase on two-earner upper-middle-class families. … The House proposal will hit small businesses that pay taxes through the individual code especially hard. … The death tax exemption would also be cut in half to $5.5 million—which would also hit small businesses and savers who have built up a small nest egg. … Corporations come in for a $900 billion fleecing, with the top tax rate rising to 26.5% from 21%. Add state and local corporate levies, and the 31% average rate will vault the US back to the highest in the developed world. … Congratulations, we’re number one.”
“Democrats’ tax hikes would slam economy and hurt the working class” Editorial Board, New York Post: “Democrats have delayed talking about the pain that goes with their plans for $3.5 trillion in new social spending, but details are finally leaking out … Laughably, they pretend the plan would boost economic growth and so increase federal tax receipts, to cover the rest of the spendapalooza. Senate Dems are looking at their own list of tax hikes, including a $600 billion ‘carbon tax’ that would sock anyone with a car, home, or business. The Democratic line is that these hikes would only harm corporations and the super-wealthy. Bull: Taxes on investment and employers wind up slamming the little guy; the Trump approach of cutting taxes on job-creators brought the first real gains in wages for the working class in decades. The pandemic put that boom on hold, but it would return if Democrats let well enough alone. No wonder they put off discussing the bill for their ‘transformative’ dreams.”
“Ways and Means Shock: ‘Hold Off on the Pay-fors Until We Are at the Altar’” Ira Stoll, The New York Sun: “What does it tell you about the Democratic leadership’s view of the American public that they need to keep their plans secret until the last minute, for fear that the public might figure out what they are doing? … The details that have escaped so far make it easy to understand why Chairman Neal was so eager to keep them hidden from the public. The most dismaying aspect is the brazenness with which it violates President Biden’s repeated promise not to raise taxes on anyone earning less than $400,000 a year. … ‘The top rate would increase to 39.6% from 37%, with that top bracket starting at $400,000 for individuals and $450,000 for married couples.’ So the ‘anyone making less than $400,000 a year’ category has an exception for people married to someone earning $400,000 a year: for those spouses, the tax increase kicks in once they earn a mere $50,000. … [Also] Who pays the corporate income tax? Shareholders, including shareholders earning less than $400,000 a year. … Keeping a tax or health care plan secret from the voters may work long enough to get it passed into law. That only postpones the reckoning. When politicians reach deeper into people’s paychecks, the voters eventually do have a way of finding out and making their displeasure known.
Flag This: Tax Hikes
Public opinion data shows that the majority of Americans favor the concept of higher taxes on the wealthy, Frank Newport writes for Gallup. With that said, “It is by no means 100% support, despite the ‘incredibly popular’ headlines,” he adds. “Naturally enough, opposition is highest among Republicans (over 50% opposed in a recent Quinnipiac survey).”
Flag This: “It is hard to find evidence that reducing inequality is a top priority for Americans. Concern about income inequality (or, for that matter, worry that taxes on the wealthy are not high enough) rarely shows up in Gallup’s monthly updates on the most important problem facing the nation. In Gallup’s May update, to cite the most recent example, only 2% of Americans mentioned the gap between the rich and the poor as the biggest problem facing the nation.”
Flag Poll: Tax Hikes
Do you agree with the proposed tax hikes on big corporations and the wealthy to fund President Joe Biden’s $3.5 trillion rebuilding plan? Comment below to share your thoughts.