The drift of the Democratic Party from working-class heros to elite Neros has gotten so obvious that even the Washington Post can’t help but notice. We already know who scores the benefit of Joe Biden’s proposal to lift the cap on state and local tax (SALT) deductions; 80% of those benefits accrue to the already wealthy. The Post walked its readers back through that calculation again yesterday:
It’s the second-most expensive item in the legislation over the next five years, more costly than establishing a paid family and medical leave program, and nearly twice as expensive as funding home-medical services for the elderly and disabled, according to an analysis by the Committee for a Responsible Federal Budget. …
Over the next five years, raising the SALT cap would provide a tax cut only to those who itemize their taxes and pay more than $10,000 in state and local taxes — a group overwhelmingly made up of the wealthy. A recent analysis from the Tax Policy Center says the tax cut will benefit primarily the top 10 percent of income earners, with almost nothing flowing to middle- and lower-income families.
These are the same figures that had Barack Obama economic adviser Jason Furman aghast last week. The data doesn’t come from a think tank, but from the Democrat-run House committee considering this change. The CRFB and the TPC are only providing the analysis, but this is so simple that the figures themselves are almost secondary. The only benefit this confers is to those who pay more than $10K in state and local taxes — and are those likely to be middle- or working-class households? Most assuredly not, which the data confirms.
But just how much they benefit by scale is astonishing:
The rich are poised to gain more from the SALT cap increase than lower-income people are from other elements of the bill, such as the child tax credit. According to the CRFB, a household in D.C. making $1 million a year would benefit 10 times as much from the SALT cap as a middle-class household would from extending the increased child tax credit for one year, which would provide an extra $1,600 for children under 6 and an extra $1,000 for older children.
The hypocrisy apparently stuns the Washington Post:
“We’re debating about whether to give lower- and middle-class families a thousand dollars more a year through the child tax credit, while giving upper-class families $10,000 or more through SALT,” said Marc Goldwein, senior policy director at the CRFB. “That’s counter to everything the Democrats have been saying Build Back Better is about and everything they said about the Trump tax cuts.”
I wrote this earlier, but I’ll write it again: capping the SALT deduction is the most progressive tax change at the federal level in decades. And it was imposed by a Republican-populist president and a GOP-controlled Congress. It’s the other party that wants to shower cash on the wealthy.
Of course, the main problem is that Democrats want to shower cash on everyone. And so do Republicans, only on a smaller scale and to their own tastes. We don’t have a party for fiscal discipline, in large part because we have an electorate that expects to be showered with cash by whomever they elect. But even in these shamefully irresponsible times, the payoff for the wealthy by the party that accuses them of being the root of all public-policy evil demonstrates a level of hypocrisy that can still momentarily take one’s breath away.
This SALT deduction might end up being more trouble than it’s worth, especially since the House version of the BBB hasn’t got a snowball’s chance in Hades of surviving in the Senate. Joe Manchin and Bernie Sanders might not agree on much these days, but they both concur that this is a ridiculous carbuncle on a reconciliation package that’s on life support in the upper chamber as it is. The longer it paints Democrats as class-warfare hypocrites, the more damage it will do to a party facing a perhaps-unprecedented reckoning in eleven months or so.