Democratic candidates offer two basic approaches to raising revenues for public programs. One is grand opera – accusing the wealthy of greed (Bernie Sanders) and malice, that is, “leaving everyone else behind” (Elizabeth Warren). For this bad behavior, there must be punishment in the form of taxation.
The other approach is to simply increase their taxes a reasonable amount and not get personal. Many rich people may not like it, but they won’t feel under moral condemnation. Some even back the idea. That is Joe Biden’s approach. And it was the way Democratic Presidents Barack Obama and Bill Clinton succeeded in raising taxes on the higher income.
Warren swings between the relatively benign “good for you for being rich” and telling them to “pitch in (only) 2 cents” and naming malefactors she’s singled out for hurt. One TV ad flashes hedge fund manager Leon Cooperman and the words “charged with insider trading.” Cooperman happens to be one of my least favorite billionaires, but being a billionaire is not in itself a criminal offense.
(The 2 cents refers to her proposed wealth tax that would place a 2% tax on household assets above $50 million and 6% on assets over $1 billion. A wealth tax would be hard to levy because how do you set a value on Picassos and a ski chalet?)
Sanders is less subtle. He’s called for the eradication of billionaires. You can Google the particulars.
Polls show that most Americans, and from both parties, want the top earners to pay more taxes. The basic concept is solid in all but the most hardened plutocratic circles. More importantly, it is also good policy, given the extraordinary tax cuts bestowed on the ultrawealthy by President Donald Trump and his Republican helpers in Congress – and the massive deficits they are feeding.
Biden’s tax proposals draw almost no attention because they aren’t accompanied by denunciations of the rich, thunder, lightning and threats. Let’s examine his proposals.
First off, Biden would return the top income bracket to 39.6%. (Trump had it lowered to 37%.) He would apply that higher rate only to income above $510,000. He would also adjust upward the capital gains tax for those earning more than $1 million.
Biden would increase the corporate tax rate to 28% from Trump’s ridiculously low 21%. That would still leave it well below the 35% on the books when Trump took office. Bear in mind there was bipartisan agreement that the 35% tax was high by international standards and needed to be lowered.
Another solid Biden idea is an alternative minimum tax that would be applied to U.S. companies that shift profits abroad to avoid U.S. taxes. We’re talking to you, Amazon and Apple.
And this should get LOTS of attention: Biden would repeal the tax hike Trump and his Republican allies thrust on ordinary Americans, mainly in blue states. That is, state and local taxes would again be totally deductible and not subject to Trump’s $10,000 limit. The feds should not be taxing money people already paid in taxes.
Put together, Biden’s changes are projected to raise about $2 trillion over a decade. The revenues would go to infrastructure, health care and fighting carbon emissions.
From a practical standpoint, Biden would be raising more money than either Warren or Sanders because he can get elected and they can’t. His proposals are also far more politically doable – in part because they are more modest, in part because he doesn’t demonize anyone.
So let’s place a bedsheet over the guillotine and put the pitchforks back in the garage. Histrionics are counterproductive. Democrats should choose Biden or another moderate and get it done.