While Democrats often brand themselves as the champions of the poor and downtrodden, they have morphed into the party representing the views — and financial interests — of America’s wealthiest elites. Their role as caretakers of the rich is on display in many of their tax-and-spending proposals, which would disproportionately favor those they claim to oppose.
Repealing The SALT Tax Limit
The 2017 Tax Cuts and Jobs Act, signed by President Donald Trump, did not merely lower federal taxes but had a provision which squeezed high-tax state and local governments. Prior to the bill, people could deduct 100% of the amount they paid in state and local taxes (SALT); in effect, the federal government made it easier for people to live in blue states and urban areas with progressive tax rates. But the 2017 law capped the SALT deduction at $10,000, forcing wealthy people to feel the financial burden of liberal governance in blue states and cities.
Democratic congressmen who represent those areas want to eliminate the SALT limitation — a move that would massively favor the top 1% of income earners. The left-of-center Brookings Institution calculated that 57% of the benefits from repealing the SALT cap “would benefit the top one percent (a cut of $33,100); and 25 percent would benefit the top 0.1 percent (for an average tax cut of nearly $145,000).” The middle class would save “a little less than $27” a year.
Repealing the SALT limit would also worsen racial income disparities, according to the left-leaning Institute on Taxation and Economic Policy. “[J]ust 5.6 percent of [b]lack families would see a tax cut compared to 9.7 percent of white families. Similarly, only 6.5 percent of Hispanic families would see a tax cut from SALT cap repeal, meaning they are 33 percent less likely than white families to benefit,” ITEP reported.
Yet repealing the SALT limit remains a top priority of some Democrats — especially in the Northeast — who have threatened to derail the $3.5 trillion reconciliation package if it doesn’t contain a sop to America’s toniest taxpayers. “We’re going to keep fighting until this is part of the bill. It’s as critical as a road or a bridge or a tunnel, which is why we are going to keep fighting for it until the end,” said Rep. Josh Gottheimer (D-NJ). Gottheimer was one of eight congressmen who wrote in a letter to Treasury Secretary Janet Yellen on April Fool’s Day that they “could not vote for a bill that has a meaningful tax impact on our constituents unless it restores SALT deduction relief to our middle-class families,” adding that it’s a “misconception that the SALT deduction doesn’t help middle class families.”
Republicans have skewered Democrats’ devotion to the issue. Raising or eliminating the SALT limit would “create tax havens for billionaires against the very tax hikes that they are proposing,” quipped Rep. Kevin Brady (R-TX), ranking member of the House Ways and Means Committee. “Penthouse occupants are cheering. The building janitor gets nothing.” Similarly, Rep. Peter Meijer (R-MI) called the “Tax the Rich” dress that Rep. Alexandria Ocasio-Cortez (D-NY) wore to the Met Gala “quite the swipe against [Senate Majority Leader Chuck] Schumer [and Speaker of the House Nancy] Pelosi’s plan to repeal the SALT deduction cap.”
— Peter Meijer (@VoteMeijer) September 14, 2021
As President Joe Biden met behind closed doors with Democrats on Capitol Hill Friday, congressmen negotiated various scenarios to help their most affluent patrons, such as raising the SALT limit without abolishing it or enacting a one- or two-year suspension of the cap. A one-year suspension would reduce tax revenues by $89 billion; a two-year suspension would lower revenues by $178 billion, according to the Joint Committee on Taxation.
And, as left-of-center think tanks have noted, virtually every dollar saved will benefit the rich.
Thousands Of Dollars To Ride In A Tesla (And More Handouts Each Month)
As part of their efforts to reduce carbon emissions, congressional Democrats have proposed greatly expanding subsidies for those who buy electric cars, trucks, and e-bikes. Yet, even after taxpayers are forced to pay for a portion of the sticker price, the wealthy will overwhelmingly benefit.
The $15.6 billion giveaway to the rich, which is part of the reconciliation bill, would give up to $12,500 to people who bought electric vehicles. “A married couple would have to earn at least $200,000 to owe that much in taxes,” wrote Tim Carney of The Washington Examiner. “So basically, this is another tax break for wealthy lawyers and doctors.”
The current proposal would compel taxpayers to give these funds to people making up to $400,000 a year — placing the recipients well within the top 5% of income earners — and to underwrite the cost of an electric car worth up to $55,000 and or a truck with a sticker price of up to $74,000.
Another provision of the bill would give $750 to people who buy electric bicycles, which is still well below the cost of low-end e-bikes. Taxpayers’ financial commitment to e-bikers doesn’t end when the new owners pedal their purchases back to their driveways; Democrats want to assure that taxpayers provide another $81 a month to pay for maintenance and upkeep.
All of this amounts to an enormous giveaway to rich, white men. “The top demographic of 2019 EV owners are middle-aged white men earning more than $100,000 annually with a college degree or higher and at least one other vehicle in their household,” according to the Electric Vehicle Council. But the electric vehicle subsidy would also benefit a core Democratic constituency: labor unions. The current Democratic proposal would cap the subsidy at $8,000 for manufacturers who make their cars with non-unionized workers; the extra $4,500 is reserved for union shops.
Democrats hope the funding will nudge Americans into purchasing electric vehicles and reduce greenhouse gases. But President Biden will need for a lot more people to purchase e-vehicles if he wants his carbon-cutting agenda to succeed. “A recent forecast by RMI, an environmental advocacy organization, concluded that a 45 percent cut in emissions from transportation by 2030 — in line with Biden’s overall goal for the nation — would require 70 million electric cars on the road and for Americans to drive 20 percent less,” reported The Washington Post.
Tax Write-Offs For Paying Union Fat Cats’ Salaries
If the Democrats’ favoritism to unions were not yet clear, the chairman of the House Ways and Means Committee, Rep. Richard Neal (D-MA), would like to allow union members to deduct $250 a year in union dues from their taxes. Only 10.8% of the workforce is unionized — down from 33% in 1955 — and the vast majority of union workers are employed by government agencies. While this tax write-off goes to union members, the dues it offsets flow upward to well-paid union leaders. No fewer than 15 employees at the AFL-CIO alone earn enough to rank among the richest 10% of Americans (requiring a salary of more than $158,002 a year), according to the Center for Union Facts. The average labor union president earns $96,775 a year, according to ZipRecruiter.
Who’s The Party Of The Rich?
These policies are part of the reconciliation bill, which remains mired in negotiations. As a result, some of these proposals may be expanded, others may be reduced or eliminated. Each represents an aspect of the Democratic Party’s ongoing evolution into the party of the rich, the powerful, and the credentialed — a movement that has continued apace since at least 2012. “IRS data shows that Democrats represent 65 percent of taxpayers with a household income of $500,000 or more while 74 percent of taxpayers in Republican districts have household incomes of less than $100,000,” wrote Nathan Skates of the Stand for Freedom Center.
But the fact that congressional Democrats included these giveaways to the wealthiest and most elite Americans — and paired them with provisions to raise taxes and fees on people making less than $400,000 — is revealing enough about the party’s true constituency.
The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.