You read that headline correctly.
Joe Biden, still president, campaigned like a wild thang on big public spending, to be funded by raising taxes on the wealthy.
The commoners need it, the rich can afford it, he stumped. And so, he triumphed last November. How the days fly; we hear the winds blow and know naught where they arise; seasons, and a whole lotta other stuff, change.
I called my friend Len, a former political consultant turned rich financier. At the signposts of life, he always took the right turning; when we stand close together, I make a nice counterpoint. You can tell by our watches and shoes.
“It’s just luck,” he’ll comfort me, and there’s always that. Whatever the source of those buffeting winds, they sure blow with fury; some houses stand firm, built on rock; others fall. Get me, with my cool beach house built on the sand dunes.
Len’s good for picking a guy up and picking up the dinner check too. He knows things, a wise, wild old salt, so I asked him: why would the Democrats even consider lifting the SALT cap?
Travel on back: President Donald Trump’s Tax Cuts and Jobs Act of 2017, full of tax blessings to bestow on the rich, so we’re told, raised a few levies, too. The clearest example was the SALT cap.
State and local taxes have been partially deductible for as long as the federal income tax has existed. This so-called SALT deduction favored taxpayers in wealthier, urbanized states, where sales tax and property taxes tend to be higher than average. Trump’s reform capped the deduction at $10,000. This change brought the IRS an extra $90 billion per year, so I hear.
Let’s turn back to Len: “It may sound like Trump was thinking to offset his tax cuts, but really, he was just giving the rich, urban states – Democrat territory – a kick in the pants.” No; he didn’t say ‘pants’. That partisan kick landed south of the zipper, according to Len, and we’ll have none of that Capitol Hill vulgarity on my delicate blog.
The Democrats are in a tough spot – blanche or grin at the news, it’s indubitably so. The party itself is in disarray, playing a violent game of Twister in both houses of Congress; the president’s popularity is sinking, undone by foreign policy missteps and an odd penchant for shouting and whispering before abandoning the podium. Recent elections didn’t go well. Someone needed to do something.
But why this step – what could they gain? “Rich party funders will be pleased,” says Len, snatching the Democrats’ bath towel away and exposing their shame.
That sounds reasonable at first, but on reflection, not hardly. Yes, both parties tend to spend their way out of trouble in election campaigns. But I note – and you can take it with joy or trembling – that the New Jersey Senate president, an entrenched Democrat, was recently defeated by a truck driver who spent a couple of grand on his campaign. Old, tested tools can fail under novel and terrible stresses.
The Democrats ran on promises to raise taxes on the rich, to fund ordinary citizens in distress. Now, they seem to be pampering those same ultra-wealthy persons of interest, so they can write fat checks to the party and help hornswoggle the electorate. Is that really the plan?
It often works; it’s called ‘business as usual’ in politics. Yet Len, a dedicated, lifelong liberal warns: “These days, it’s unspinnable. The electorate will take it as cynical backroom philandering and hypocritical disdain for the principles that got them elected in the first place. If that’s what they’re doing, they’re asking for…”
…a double whammy to the cods, as Shakespeare might have rendered it. It’s hard to keep politics highbrow.
Democrats are not united on lifting the SALT cap. Losing the faith of voters is an open concern, but the lost income is perhaps their sharpest worry. How can you fund a $3.5 trillion social spending package – although realistically, that target now seems unreachable – if you can’t find the tax income to pay for it?
Many Democratic proposals to fund their legislative dreams involve small sums, in federal government context. Killing the Roth IRA strategy should rake in $4 billion – over ten years. Ending the step-up in basis was estimated to be worth $323 billion in estate taxes over ten years, but it is now off the agenda. Wiping out the SALT cap would shrink tax coffers by nearly one trillion dollars over the next decade. It’s sure hard to fathom, no matter what Len tips me, what the Democrats are thinking today.
Senator Bernie Sanders, D-Bastille, quite naturally is red-faced at the notion. The firebrand senator, who really prefers rocking chairs to violent revolution, I’m told, has sensibly suggested a compromise: raising the SALT cap for people earning less than $400,000 per year.
The gesture would be helpful, says Bernie, calmly noting that in some states, property taxes are sky-high and middle-class residents could use a break. “But to make a total repeal is to give massive tax breaks to very, very wealthy people,” he warned.
Will the SALT cap really blow off? In our disordered land, I’m afraid even ‘wonks’, as Len jarringly brands himself, are running on fumes – there’s simply no saying. Two weeks ago, the idea of Democrats doffing the SALT cap would have seemed nutty. If it happens, investment specialists and estate planners can expect some brisk business from their wealthier clients. A silver lining, as we’d say in our office.
Yet I’m slightly remorseful. Poor Senator Sanders. He’s a well-regarded elder – of wrongheaded politics, never mind – and if it happens, he’ll get so riled up, it may spoil the pleasure of his spartan Vermont rocker. I’m an aged fellow myself and can readily imagine the ache in his old heart and soul – and unmentionables.