The last time Democrats took over the Presidency and Congress, the party spent its first year in power making the big banks that had wrecked the economy rich, then letting public money subsidize their Wall Street bonuses. campaign donors. The show gave Republicans a political bailout in mid-term in 2010, allowing them to portray themselves as anti-establishment populists defying an elitist government.
Twelve years later, history rhymes. Democrats were elected to power on popular promises to tax the rich, but they are now making national headlines over their proposal to give new, narrowly targeted tax breaks to enrich their wealthy Blue State donors – just like a new survey shows nearly two-thirds of Americans see the party as “out of touch with most people’s concerns.” And now the Republican machine is preparing to demagoguish the question in 2022.
The situation resembles a Veep scenario satirising liberal elitism: as millions of voters are crushed by healthcare costs and rising energy prices, and Democratic lawmakers have abandoned With a minimum wage of $ 15, Democratic leaders are pushing a regressive proposal to allow wealthy homeowners to deduct more of their state and local taxes (SALT) from their federal taxes.
This initiative, which would bring almost no benefit to the working class, is no small adjustment. After Democrats gutted their hugely popular initiatives to expand Medicare and lower drug prices, the tax initiative has now become one of the costliest provisions in all of the Build Back legislation. Better from President Joe Biden.
Under current law, the relatively small number of Americans wealthy enough to itemize their tax returns are prohibited from writing more than $ 10,000 of their state and local taxes on their federal tax returns. In 2019, that represented only 13% of Americans.
This means that the entire SALT debate is about a policy affecting almost exclusively a small number of the wealthy, who are already disproportionately benefiting from other tax breaks. And really, it’s about the tiny number of the rich who live in specific places with higher state and local taxes, and who pay more than $ 10,000 of those taxes each year.
Mimicking Republicans who lied through their teeth about claiming that estate tax cuts help poor farmers, Democratic lawmakers in wealthy neighborhoods – and even some union leaders – have spent months telling a different story. Brush from the side critical of the few outspoken Democratic opponents, they insisted that a repeal or increase would primarily help “hard-working middle-class families,” as a group of well-off Democrats in the Liberal District recently claimed.
But a new Tax Policy Center analysis of current Build Back Better legislation sheds light on this blatant lie.
This shows that while the Build Back Better reconciliation bill would still raise taxes for billionaires, adding SALT deductions to the bill would not provide any significant help to the middle class and result in significant tax breaks for the billionaires. very wealthy people just below the billionaire stratosphere.
In total, raising the SALT cap would result in a BBB bill in which two-thirds of Americans earning more than $ 1 million would get a tax cut, and the average cut for those households would be over 16,000. $.
In a country where 87% of people already earn too little to detail their tax returns and therefore are not eligible for all SALT Deductions, the entire Democrats’ campaign is designed to confuse and distract from all the data showing that repealing the SALT cap would be a more regressive policy than Donald Trump’s tax cuts in 2017, and would exacerbate racial and economic inequalities.
But precisely because a group of leading corporate Democrats have insisted on constantly lying to their liberal voters and claiming that the SALT cap repeal is primarily aimed at the middle class, many of their voters were almost certainly convinced that they are overwritten by the SEL Cap.
Realizing that these aforementioned facts were irrefutable, Democrats and their allies tried a different tactic – two union leaders published an op-ed claiming that “the SALT deduction is tax relief you receive to support your community” by paying public levies and higher premises for schools. and utilities. A group of Congressional Democrats also claimed that the SALT cap had led “wealthy taxpayers to move from high-cost-of-living states” to low-tax jurisdictions.
The arguments fell flat because they are ridiculous. There are simple ways to more surgically reform the federal tax code to support communities without naked funneling tons of money to billionaires – and those who dismiss this truth are either too ignorant or too unimaginative, or too corrupt to recognize an alternative. Meanwhile, there is little evidence that the SALT cap caused massive tax migration.
In other words, the whole argument is another cynical lie.
This raises the big questions: why are there so many lies about it? Why do Democrats see an increase in the SALT cap as a staple of their economic agenda?
Two reasons – both of which illustrate the fundamental motivations of the Democratic Party.
First, a SALT cap repeal is a precisely targeted enrichment program for corporate lawyers, hedge fund managers, business consultants, real estate investors and other wealthy cartoons who organize and attend Democratic fundraisers in wealthy enclaves. Democratic leaders are responding to the donor class concentrated in these wealthy regions, and this donor class covets the return of tax breaks for their McMansions (as do wealthy members of Congress who could personally benefit from a repeal of the SALT cap).
Equally important, however, is the motivational power of tribal partisanship.
Corporate Democrats who want to enrich their donors with a repeal of the cap constantly remind Liberals that the cap was originally imposed by bogeyman Donald Trump, whose motive was revenge. He wanted to punish the Blue State donors who were funding his opposition, and a SALT cap was the perfect way to achieve that.
But motives aside, the policy itself made sense: it actually limited a few giant tax breaks for the wealthy.
Left without a compelling argument to repeal the cap and make their donors richer, corporate Democrats have taken hold of the Trump origin story of the SALT cap. They use this provenance to gain Democrats’ support for the initiative by cynically arming the hatred of progressive voters against the former president.
Indeed, these Democrats suggest that the best way for the Liberals to get revenge on Trump is to adopt a tax policy that gives coastal millionaires lucrative tax breaks and gives the middle class next to nothing.
It’s a Republicans dream scenario. They get another political bailout from a Democratic Party that is still captured by its wealthy donors.
As the 2022 elections approach, the Republican Party already seems to feel the opportunity.
Senator Tim Scott, the Republican of South Carolina, recently tweeted, âThe Democrats’ SALT tax deduction is almost exclusively a tax cut for the rich. They are here shouting “tax the rich” while preparing documents for the rich behind closed doors. “
In October, Senate Minority Leader Mitch McConnell criticized “Democrats’ obsession with the so-called SALT cap,” saying: “Even though our colleagues are drafting the biggest tax hikes in half a century, they cannot resist the concept of special tax cuts for wage earners in the blue states.
There is still a opportunity for Senate Democrats to block the most egregious of these tax breaks. But if Democrats move forward with their current proposal instead, the Republican rhetoric is likely a glimpse of what’s to come in 2022 – a revival of some of the Tea Party’s most effective attacks during the 2010 midterm.
Only this time around, the Republican claiming Democrats secretly working to enrich their elite donors would actually be true – and that will be boosted by millions of dollars in TV commercials designed to enrage swing voters.
Many of them are already frustrated by the betrayals of Democrats. Democrats are now looking at an easily caricatured tax policy because elitist threatens to turn this frustration into another mid-term bombing.
David Sirota is a US Guardian columnist and award-winning investigative journalist. He is editor-in-chief at Jacobin and founder of the Daily Poster. He was the writer of Bernie Sanders’ presidential campaign speech
This article originally appeared in the Daily Poster, a grassroots investigative media outlet.