In a last-ditch effort to save the Democrats from their own worst instincts, Senator Bernie Sanders (Independent of Vermont) seeks to try to curtail the party’s politically toxic initiative to enrich wealthy real estate owners in liberal areas. If his maneuver fails, Republicans will have a powerful political weapon for the 2022 midterm elections, as shown by a new video the GOP just released on Monday.
It’s about the Corporate Democrats’ proposal to increase the level of state and local taxes (SALT) that can be deducted from federal household taxes. The $ 275 billion proposal is now the second largest piece of Build Back Better legislation, though it would only benefit the 13 percent of Americans who break down their tax returns.
For months, our reporting has been warning that lifting the $ 10,000 cap on such deductions would mean a massive tax cut for the super-rich, including major Democratic lawmakers who advocate the measure. The GOP has hammered the Democrats over the proposal, saying it proves the Democrats are trying to help the rich. Her new video previews how the Republicans will portray themselves as populist critics of regressive tax cuts ahead of the 2022 midterm elections if the Democrats pass their current SALT initiative.
But that’s where Sanders – a longtime critic of raising the SALT deduction cap – comes in.
After the House of Representatives Democrats passed President Joe Biden’s Build Back Better bill last week, which would raise the SALT cap to $ 80,000, the Vermont Senator teamed up with New Jersey Democratic Senator Bob Menendez to to propose a more restricted version. Although their proposal has not yet been finalized, the new tax breaks for those who earn more than $ 400,000 a year are to be phased out. The proposal broadly mimics a plan by the Institute for Taxation and Economic Policy (ITEP).
A new study by the Tax Policy Center (TPC) shows how the plan is doing.
As the TPC chart shows, one of these proposals is clearly better politically and metrologically – while all of its benefits would go to the country’s richest quintile, the Sanders-Menendez Compromise (represented by the yellow bars). in particular, would reduce the amount of tax breaks for the richest of the rich.
“The big difference would be at the top of the income distribution,” wrote Howard Gleckman of TPC. “Almost a third of the profit from the $ 80,000 cap would go to the top 1 percent of households (those making nearly $ 870,000 or more). But the top 1 percent would only get 0.1% of the benefit if the SALT cap of $ 10,000 is gradually restored from $ 400,000. “
Democratic advocates of simply raising or removing the cap have continued to deliberately promote fact-free misinformation about the implications of their proposal, pretending that the new deductions will mainly benefit firefighters, teachers and other middle-class households. Tax data proves the claim is a blatant Donald Trump-esque lie – the vast majority of the benefits of the proposed new SALT deductions would go to the very wealthy.
In addition to blatant lies, Democrats advocating a higher cap on the SALT withdrawal have refused to adopt the ITEP plan. That refusal suggests that the real goal of Corporate Democrats in raising the SALT cap is not to protect the middle class but instead to enrich the wealthy blue state-donor class – an accusation Republicans will no doubt reinforce if nothing changes.
Sanders, for his part, has dubbed the House proposal “bad politics” and “bad politics” – and his initiative appears to be aimed at making politics at least a little bit better, although his plan is barely perfect.
“If you actually care about (the middle class), you could set the cutoff at, say, $ 150,000,” said Marc Goldwein of the Pittsburgh Post-Gazette’s Federal Responsible Budget Committee. “That would still mean that the greatest benefit would go to the people who make $ 150,000, but it would appeal to the actual middle class population. If you have the [cutoff] At $ 400,000 or $ 500,000, you’re not doing that for the middle class. “
The higher caps should at the same time limit the benefits to the rich, but also deter enough democratic lawmakers from wealthy districts from ending all of the Build Back Better legislation. And if the Senate adopts the Sanders-Menendez proposal, it would at least deprive Republicans of their new talking points, which the Democrats are more focused on enriching their billionaires than on helping the country.
Recent Republican criticism of the Democrats’ SALT proposals has already caused a stir, as polls show that most Americans see the Democrats as unaffiliated with the country. At least some of Sander’s Democratic counterparts seem to see the political problem in passing the $ 80,000 SALT cap, which gives two-thirds of Americans who earn more than $ 1 million a year an average tax cut of $ 16,000 -Dollars would mean.
“Republicans argue loudly and repeatedly that they will say that it is easier for Democrats to have millionaires than they did in 2017,” Senator Ron Wyden (Oregon Democrat) told NBC News.
“It would be absurd if this law cut taxes for the richest people in America,” Colorado Democratic Senator Michael Bennet told Business Insider.
If Senate Democrats adopt the Sanders-Menendez provision as part of this chamber’s version of the Build Back Better bill, it would force corporate Democrats into the position of either accepting the measure and allowing Biden’s law to pass or stopping the legislation and solely for it to fight tax breaks for households that earn more than $ 400,000.
In this scenario, Republican lawmakers and the rich would hope that corporate Democrats choose the latter route. If they did, the GOP would get their political bailout – and wealthy donors would get their financial aid too.