Democrats Considering Sneaking Massive Tax Cut for the Rich Into House Reconciliation Package


On Thursday, President Joe Biden told reporters he was sick of giving tax breaks to the top 1 percent — which is why, of course, the Democrats’ $3.5 trillion spending plan will hike taxes on those making more than $401,601.

“Let me ask you this: Where is it written in that all the tax breaks in the American tax code go to corporations and the very top? I think it’s enough. I’m tired of it,” Biden said at the White House on Thursday, according to The Hill.

“I’m not out to punish anyone. I’m a capitalist. If you can make a million or a billion dollars, that’s great. God bless you. All I’m asking is you pay your fair share, pay your fair share, just like middle-class folks do.”

The money the Democrats would raise would purportedly go toward funding the massive spending splurge the Biden White House has undertaken. The problem is they may be about to undercut it with a giveaway to the top 1 percent — provided, of course, they live in the right states.

Let’s back up to 2017. Then-President Donald Trump’s tax cuts limited what’s known as the SALT deduction, which allowed taxpayers to deduct taxes to state and local governments, up to $10,000.

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As Bloomberg reported, the tax was a boon to the upper class in blue-state strongholds with high property taxes — particularly California, New Jersey and New York. It was also a way for the federal government to subsidize free-spending blue states. Sure, their residents may have been paying high taxes locally, but they didn’t feel the pain because they got to write those off on their federal returns.

When Trump eliminated the tax cuts, Democratic members of Congress from the affected states started braying like stuck donkeys. In 2021, they’re braying again — this time threatening to withhold their support for the $3.5 trillion plan unless the full SALT deduction is restored.

“We need to have this state and local tax deduction. We built a whole system around it,” said Democratic Rep. Tom Suozzi of New York, according to CNBC. “People are leaving our states. And when they leave, it leaves behind a hole in our revenues.”

Should the SALT tax cap remain in place?

By admitting New York had “built a whole system around” the SALT deduction and that people were fleeing high-tax states without the federal government subsidizing them, Suozzi was admitting more than he realized. He was joined by New Jersey Reps. Josh Gottheimer, Bill Pascrell and Mikie Sherrill in demanding a full repeal of SALT caps.

Usually, this is where the party’s progressive wing would provide a counterbalance, considering SALT deductions disproportionally affect the wealthy. However, even Democratic New York Rep. Alexandria “Tax the Rich” Ocasio-Cortez is willing to look into taxing the rich in her part of the world a bit less.

In a tweet Friday, AOC said while she was against fully repealing SALT caps, “I am open to taking a look at SALT and addressing concerns for families put under the squeeze in high cost of living areas.” You know, like New York City.

And let’s be clear — this would be a giveaway to the top 1 percent just because those 1 percenters tend to live in blue states. As Bloomberg noted, data from the conservative Tax Foundation found taxpayers making upwards of $401,601 “would face a tax increase less than half as large as that if the current cap on the write-off were retained.”

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“Those individuals would see their after-tax incomes fall 1.9% under the House Democrats’ current tax bill accompanied by a SALT-deduction restoration, compared with a decrease of 5% if the $10,000 limitation on the write-off were not expanded,” Bloomberg’s Laura Davison wrote in a Friday piece.

“Other taxpayers in the top 5% of earners would see the small tax hikes in the current House plan turn into tax cuts with the addition of a more generous SALT deduction. Taxpayers earning $165,181 to $401,600 would see their incomes rise 0.9% with an unlimited SALT deduction, compared with a 0.3% after-tax decrease without SALT relief, according to the data.”

Data from the left-leaning Brookings Institution found that roughly 57 percent of a repeal of the SALT cap would benefit the top 1 percent of earners, with an average windfall of $33,100 for each one.

The question is whether the Democrats can sneak it into the package. While it wasn’t in the tax portion of the $3.5 trillion plan that came out of the House Ways and Means Committee last week, Democratic leaders could still insert it into the package — and they’re hard at work doing that, although perhaps not in the form of a full repeal.

In a joint statement last week, Pascrell and Suozzi, along with House Ways and Means Committee Chairman Rep. Richard Neal of Massachusetts, said they “continue to work among our colleagues and the Senate to undo the short-sighted capping of SALT by Republicans.

“We are committed to enacting a law that will include meaningful SALT relief that is so essential to our middle-class communities and we are working daily toward that goal,” they said, adding House Speaker Nancy Pelosi was in on the negotiations.

If a full repeal isn’t in the cards, one option would be expanding the amount that can be deducted while not removing the cap entirely.

Both of these, however, would still be a giveaway to the top 1 percent of taxpayers. The difference is that it would reduce the tax burden most in states that elect Democrats — and tax their citizens accordingly. If the rich live in one of those states, their “fair share” could look a heck of a lot different than everyone else’s.

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C. Douglas Golden is a writer who splits his time between the United States and Southeast Asia. Specializing in political commentary and world affairs, he's written for Conservative Tribune and The Western Journal since 2014.
C. Douglas Golden is a writer who splits his time between the United States and Southeast Asia. Specializing in political commentary and world affairs, he's written for Conservative Tribune and The Western Journal since 2014. Aside from politics, he enjoys spending time with his wife, literature (especially British comic novels and modern Japanese lit), indie rock, coffee, Formula One and football (of both American and world varieties).
Morristown, New Jersey
Catholic University of America
Languages Spoken
English, Spanish
Topics of Expertise
American Politics, World Politics, Culture