Democrats are currently considering including a tax break for the wealthy in the reconciliation bill — but Sen. Bernie Sanders (I-Vermont) has rejected the proposal, calling the idea “beyond unacceptable.”
Democrats are debatingIn their Build Back better Act, they propose to repeal the SALT tax deduction cap for five year. The current policy allows taxpayers to deduct local or state taxes up to $10,000 from federal income taxes. In their massive tax overhaul, Republicans set the limit in 2017 to pay for their tax cuts for corporations. The cap could be repealed so that the wealthy can pay less tax than the Republicans have already given them.
Because the proposal almost exclusively favors the wealthyProgressives and the 1 % are strongly opposed to the idea.
“According to media reports, Democratic negotiators are working on a repeal of the SALT deduction cap for up to five years, which would cost $475 billion and give the richest 5 percent $400 billion in tax cuts,” Sanders said in a scathing statement on Tuesday. “As a result, the top 1 percent would pay lower taxes after passage of the Build Back Better plan than they did after the Trump tax cut in 2017. This is beyond unacceptable.”
Throughout their campaigns, Democrats and progressive lawmakers have promised to raise taxes on the wealthy to take steps toward narrowing the growing wealth gap between the ultra-wealthy and the rest of the country — and by repealing the SALT cap, they would essentially be doing the opposite.
Conservative Democrats have suggested that a total repeal of the SALT caps would be extremely regressive. However, the non-profit Committee for a Responsible Federal Budget believes it would be. wrote earlier this year that “repealing the SALT cap would be more regressive than the [2017 Tax Cuts and Jobs Act].”
The committee determined that while the bottom 90% of earners would not see any benefit from the repeal, those in the 90 to 99th percentile could save almost $2,500 a yearly, while those in the top 1 percent would see an average household save $35,660 a yearly. The repeal would be such a huge benefit to the rich thatThe bill would ultimately deliver. a net tax cutEven with tax increases proposed, it is possible to make the most of America’s wealthiest citizens.
Tax relief for the bottom 60 percent would average $6 per household, with $15 per household in each of the middle quintiles.Tax relief for the bottom 60% would average only $6 per household, with $15 per household in the middle quintile. 🔗 https://t.co/U6Aaujkayw pic.twitter.com/yfkyTxPYyX
— CRFB.org (@BudgetHawks) July 14, 2021
“At a time of massive income and wealth inequality, the last thing we should be doing is giving more tax breaks to the very rich. Democrats campaigned and won on an agenda that demands that the very wealthy finally pay their fair share, not one that gives them more tax breaks,” Sanders said. “I will not support more tax breaks for billionaires.”
He told reporters that he would be open to a compromise approach that would lift the cap only for those making less than $400,000 a year, which is the level of income that President Joe Biden has said he won’t raise taxes on.
Conservative Democrats like Rep. Josh Gottheimer (D-New Jersey) have been insistent on including the SALT repeal, with nearly two dozen representatives vowing to vote against the bill if the repeal, which could potentially be retroactive to this tax year, isn’t included. Representatives Alexandria OcasioCortez, D-New York, and Pramila Jayapal are both progressives. However, they have not supported a complete repeal as Sanders suggested.
The Committee for a Responsible Federal Budget determined that the repeal, if it is passed, would be the costliest part of the reconciliation billIt would cost $475 Billion over five-years and could prepare the country to receive $1 trillion in tax reductions almost exclusively for the rich over ten years. This cost is more than half of the $1.75 trillion currently being debated in Congress.
Conservative Democrats’ support of the repeal is especially heinous because they’ve fought tooth and nail against proposals that would help the middle and lower classes like the prescription drug price negotiation plan. These representatives are also aligned to Sen. Joe Manchin (D–West Virginia). Who complained MondayThe reconciliation bill was just too expensive WithoutThe SALT cap repeal is possible even though the bill as it stands now is fully paid for.
Despite being a supposed deficit-hawk, Manchin has remained surprisingly mum about the idea for a repeal. That is what it meansHis complaints about the federal deficit, and the cost of legislation are a strategy of obstruction.
