Politics Democrats’ Tax-Hike Bet Relies on Their New $500,000-Plus Voters

14:40  19 april  2021
14:40  19 april  2021 Source:   bloomberg.com

Jeff Bezos endorsed higher corporate tax rates. But it won't cost him much

  Jeff Bezos endorsed higher corporate tax rates. But it won't cost him much A year ago, Joe Biden, then the presumptive Democratic nominee for president, was picking a fight with Amazon over how little it paid Uncle Sam. Now Biden is president, and Amazon CEO Jeff Bezos is on a lonely island supporting the White House's plan -- to raise corporate taxes. © Saul Loeb/AFP/Getty Images Jeff Bezos, founder and CEO of Amazon, speaks during the Economic Club of Washington's Milestone Celebration event in Washington, DC, on September 13, 2018. Hardly any other company leaders have come out in support of Biden's plan.

(Bloomberg) -- President Joe Biden is asking congressional Democrats to vote for a tax increase that will test a long-held liberal article of faith: that many wealthy Democrats won’t mind paying more in taxes if they can be convinced the money would lead to greater prosperity for everyone.

Democrats now represent 65% of taxpayers with a household income of $500,000 or more, according to pre-pandemic Internal Revenue Service statistics. And as Congress begins considering Biden’s $2.25 trillion spending and tax proposal, Democrats are being explicit with their constituents about how much it’ll cost them -- and how much they say it will begin to address issues like income inequality.

Could Joe Biden's tax plan hit Ireland’s economy?

  Could Joe Biden's tax plan hit Ireland’s economy? US investment in Ireland could dry up if President Biden leads a major change to global tax rules. Irish tax advantage under threatIn among those tech company HQs in Dublin's docklands, you will also find the offices of the lawyers and accountants who help US firms use Ireland's tax system to reduce their global tax bills.For the last 20 years Ireland has had a simple message: invest here and you will pay just 12.5% tax on your Irish profits.That compares favourably to headline corporation tax rates of 19% in the UK, 30% in Germany and 26.5% in Canada.It is an article of faith in Irish politics that the 12.

The sales pitch reflects their theory that wealthy Democrats will support paying higher taxes because of a changed economy and a political realignment that’s put cultural issues ahead of traditional pocketbook issues in voters’ minds.

“Many of my constituents would be willing to pay the bill if what they’re paying for is visible, tangible and useful to them,” said Tom Malinowski, a Democrat who represents a wealthy New Jersey district.

Former President Donald Trump accelerated the Republican Party’s transformation from the well-heeled party of big business to a more populist, working-class profile.

Read more:
Biden Determined to Tax Rich After Windfalls During Crisis
Biden Vows to Raise Taxes on Families Earning Over $400,000
Biden’s Likely Tax Wins Are Personal-Rate Hikes, Audits of Rich

In 1993, the last time a president asked Congress to vote in a significant tax hike, the typical congressional district represented by a Republican was 14% richer than the typical Democratic district, according to household income data from the Census Bureau. By 2020, those districts were 13% poorer.

NYC mayoral candidates weigh in on changing unfair property tax system that burdens poor and middle-class neighborhoods

  NYC mayoral candidates weigh in on changing unfair property tax system that burdens poor and middle-class neighborhoods Candidates are faced with the same question Mayor de Blasio has kicked down the road for year: how to make city property taxes more fair.For years, New York City’s property tax system has come under fire because homeowners in poor and middle-class neighborhoods often pay more than people who own more valuable homes in tonier parts of town.

An anti-tax ethos remains part of the party’s DNA, even as fewer Republican voters would pay the tax increases directly. Nearly three-quarters, or 74%, of taxpayers in Republican districts had a household taxable income of less than $100,000, according to the IRS statistics, and wouldn’t see their income tax rate rise under Biden’s plan.

Republican members of Congress are more dependent than Democrats, though, on PACs that represent corporate interests. In 2016, House Republicans received about twice the donations that Democrats did from corporate political action committees. In 2020, business-interest PACs gave $181 million to Republicans and $135 million to Democrats.

Social Welfare Programs

After pushing a $1.9 trillion pandemic recovery bill through Congress on party-line votes, Biden has outlined even more spending to build or repair infrastructure and to buttress social welfare programs, which he argues would benefit working- and middle-class taxpayers.

Are you thinking of moving soon? Here are the best cities for taxes

  Are you thinking of moving soon? Here are the best cities for taxes The previous few weeks have been a maelstrom of higher costs for families as both New York and the federal government weigh hefty new taxes. Facing massive budget deficits in coming years, the Empire State passed a raft of new taxes targeting the wealthy; some high-earning New York City residents will see their marginal tax rate skyrocket to over 50 percent. Meanwhile, the White House weighs hefty new federal taxes on businesses and the wealthy.

The new spending would be partially paid for by an increase in the corporate tax rate -- to 28% from 21% -- and by returning the top rate for individuals to the 39.6% of the Clinton and Obama eras. Biden has promised that no household making less than $400,000 a year would pay more in taxes.

“I think President Biden gets it. He’s selling this plan primarily as a way to rebuild America,” Malinowski said. “That all makes sense to the people I represent. That’s an investment with an high return.”

chart, bar chart: Wealthy Districts Once Leaned Republican ... © Bloomberg Wealthy Districts Once Leaned Republican ... chart, bar chart: ... But Democrats Now Dominate © Bloomberg ... But Democrats Now Dominate

Representing the Rich

Malinowski flipped his suburban district to the Democrats in 2018 on a campaign of fiscal responsibility, an issue once dominated by Republicans that was abandoned in the Trump era. His district contains the eighth-highest percentage in the country of taxpayers with an adjusted gross income of $500,000 or more, about 7%.

map: Taxation with Representation © Bloomberg Taxation with Representation

Representative Tom Suozzi’s district ranks sixth in the nation by that same measure. But for the New York Democrat, addressing income inequality is a selling point.

Child tax credit: Will you receive $500, $3,000 or $3,600 per kid? Here's your monthly total

  Child tax credit: Will you receive $500, $3,000 or $3,600 per kid? Here's your monthly total CNET's child tax credit calculator uses the number and ages of your eligible kids, plus your yearly income, to break down how much money you should really expect in all seven payments.CNET's child tax calculator below will break down how much you'll get with each payment. But first, a few things to know. You'll get half your money this year and the other half about a year from now. Kids of different ages count toward different amounts. If your child ages out of a payment bracket, you'll get less money. There are some rules parents who share custody of a kid should know, and additional facts for parents of 2021 babies.

His Long Island constituency includes parts of Queens --abutting the district held by Representative Alexandria Ocasio-Cortez, a self-described democratic socialist. But other sections, like his home town of Glen Cove, also have a 12-bedroom mansion listed for sale at $19.9 million.

“I’m not a soak-the-rich type of person, but I’m a fairness person,” Suozzi said. “The pandemic has been cruelly uneven. I don’t want to see the solution of our income inequality be done solely through a redistribution method. But it’s a piece of the answer.”

Income inequality, one of the broader issues Biden says his bill will address, was on the rise long before the coronavirus pandemic. Since President Bill Clinton’s tax law in 1993, median incomes have increased 26% in real dollars, but those in the top 5% have seen their incomes go up 48%, according to the Census Bureau. Incomes in the bottom 10% have risen only 19%.

“It’s time to update some of our prior assumptions on tax policy,” said Vanessa Williamson, a senior fellow at the nonpartisan Tax Policy Center. “We still imagine that we’re living at the height of the Reagan Revolution, and it was a long time ago.”

No Room for Error

In 1993, Clinton pushed through a budget that contained a $246 billion tax increase -- about $450 billion in today’s dollars. And it hit roughly the same taxpayers that Biden is targeting. Clinton’s 39.6% top rate applied to joint returns of more than $250,000, or $455,000 today.

Businesses hate GILTI but may like Democrats’ overhaul plan even less

  Businesses hate GILTI but may like Democrats’ overhaul plan even less Democrats are aiming to expand GILTI so that it hits all of multinational corporations’ foreign profits — intangible and otherwise. “It changes the premise and the conceptual basis for this regime that is supposedly trying to get at excess profits generated by intangibles to one that’s just taxing all the income,” said Mindy Herzfeld, an international tax expert at the University of Florida’s law school. “They should probably rename it.”In fact, Democrats say they intend to delete the GILTI name from the statute, though lawmakers continue to use the term, at least for now, because it's well known.

But he lost 46 Democratic votes when the bill passed the House, and it took Vice President Al Gore to break a tie in the Senate.

Now, Biden has less room to maneuver. His Democratic Party controls the House with 218 seats to Republicans’ 212, and five vacancies. If the vote were held today, Biden could afford to lose only three Democratic votes in the House -- and none in the Senate -- or his tax plan is doomed. And more defections could spell trouble for the 2022 midterms, when presidents typically see their House majority slip away.

But after losing the majority in the U.S. House in every congressional election from 2010 to 2016 -- largely to Tea Party Republicans using tax and spending issues as a proxy for larger cultural themes -- Democrats took control in 2018, flipping several affluent suburban districts along the way.

“Things have changed in terms of more Democrats being willing to raise taxes, and that’s because there are fewer moderate Democrats remaining in Congress,” said former Representative Dan Lipinski, who lost his 2020 primary to a more progressive challenger. “The ideological battles within the Democratic Party have been kept to a minimum so far, but at some point I think that’s all going to come out.”

One Democrat who broke ranks with Clinton in the 1990s was Lipinski’s father, Bill, who represented the suburban Chicago district before his son. The elder Lipinski told the Chicago Tribune at the time that, “it’s not easy for me to vote against a Democratic president. But do I feel disloyalty? No.”

Biden Aims at Top 0.3% With Bid to Tax Capital Gains Like Wages

  Biden Aims at Top 0.3% With Bid to Tax Capital Gains Like Wages President Joe Biden wants to end the preferential U.S. tax treatment of investment income that has benefited the nation’s wealthy as he seeks to fund a sweeping new social-spending program. But he will need to overcome a major political hurdle in Congress to do so. The White House plans to propose almost doubling the capital gains tax rate for those earning $1 million or more, to 39.6%, according to people familiar with the proposal. That wouldn’t affect many. Only about 0.

Democrats like the Lipinskis have all but disappeared from Congress as gerrymandered districts and hyper-partisanship have resulted in more party-line votes.

“It’s going to be a really big test if Democrats raise taxes on those who are more wealthy. I’m sure Republicans are hoping that happens and that it brings some of those party-flipping districts over to them,” Dan Lipinski said of Biden’s bill.

chart: Going Rate © Bloomberg Going Rate

SALT in the Wound

The political realignment has also put Democrats in a new position of bargaining to restore a tax break for their wealthy constituents before they’ll agree to support a higher income-tax rate.

Trump’s 2017 tax bill capped the annual federal tax deduction for state and local taxes -- a popular write-off with taxpayers in high-tax, high-property-value states -- at $10,000.

Many Democrats in Congress who won formerly Republican districts campaigned on restoring that deduction. It was a particularly salient issue in New York and New Jersey, where Democrats were able to flip seven GOP seats in 2018.

“I’m not voting for any change in the tax code whatsoever unless there’s the restoration of the SALT tax deduction. I’m laying that chit on the table,” Suozzi said.

Nearly two dozen other Democrats, including 17 New York Democrats and New Jersey Representatives Bill Pascrell, Josh Gottheimer, Mikie Sherrill and Malinowski, have set the bar in the same place. But they’ve also suggested the issue is important enough that they would trade a higher income tax rate if it included more broad-based tax relief, like lifting the SALT cap.

So it’s possible that the solution would be to raise the cap but not eliminate it entirely. “We have to do something about SALT or else I can’t be for it,” Malinowski said. “I think the administration understands that.”

For more articles like this, please visit us at bloomberg.com

©2021 Bloomberg L.P.

GOP digging in against Biden’s 'terrible idea' of raising capital gains tax .
Republicans are staunchly opposing President Joe Biden's plans to pursue a hike in the capital gains tax in order to pay for his family spending plan. © Provided by Washington Examiner The administration is reportedly weighing nearly doubling the capital gains tax for wealthy individuals from 20% to 39.6%. Individuals making $1 million or more could end up being subject to a federal rate of up to 43.4% when an existing Obamacare surtax on investment income is included.

usr: 1
This is interesting!