After decades of watching Democrats enact tax policy from close-up and afar, the only conclusion anyone can come to is this: Democrats have no over-riding, over-arching higher order principle when it comes to tax policy.
Democrats just like to tax everything. Just like Republicans don’t like to tax anything. They are yin and yang when it comes to tax policy.
For decades, liberal Democrats have screamed the same thing: “Make the rich pay their fair share!” without ever defining exactly what is their “fair share” in numerical percentage form.
How do they “know” what the magic “fair share” is for anyone to pay in taxes? They seem to “know” what to do with your money better than you do, so you must give them as much as they demand to do it for you.
Most of the time, Democrats use class warfare as the bloody shirt to wave for scoring cheap political points that keep them in political power; and that is about it. They really don’t want to tax rich people out of existence as they preach. They need rich people to pay for as much government spending as possible. They need rich liberals on Wall Street and in Hollywood and the Silicon Valley to contribute hundreds of billions to their campaigns and to dark money independent committees to do their political work for them behind the scenes.
Which leads to their contradictory self-defeating tax policy of today. Out of one side of their mouths, socialist Democrats say they want to soak rich corporations for an additional $380 billion in taxes over the next five years. Out of the other side of their mouths, they say they want to repeal the SALT restrictions in the tax code that made millionaires in blue states, such as New York and California, pay much higher taxes under the Trump tax plan passed in 2017.
Which is it? Do Democrats want to stick it to wealthy corporations owned and operated by really wealthy people, or do they want to let the rich in New York and California stick it to the rest of America’s taxpayers by subsidizing their enormous tax write-offs?
SALT refers to state and local tax deductions. The Trump tax plan restricted the amount of state and local taxes a person could deduct to $10,000 per year. For high-income earners in states such as California and New York where state income and local property taxes are massive, the Trump tax plan was not a tax cut for the rich but a significant tax hike for people making over $1 million per year.
The corporate tax rate is now 21%, down from 28% in the Obama/Biden era before 2017. Corporate tax collection in 2019 was $232 billion in a booming pre-COVID-shutdown economy, which still represented only 6.6% of all tax revenue sent to Washington D.C.
Assuming Joe Biden and the Democrats pass a 28% corporate tax rate, theoretically an additional $76 billion might be collected in corporate taxes annually. Possibly $400 billion more in corporate taxes might be collected over the next five years, assuming smart corporate CFOs all of a sudden become dumber than dirt and can’t figure out how to avoid paying 28% corporate tax rates when they have avoided paying 21% today.
Joint Tax estimates SALT repeal would cost the Treasury $88.7 billion in the first year alone. Repealing SALT would lose close to $500 billion in federal tax revenue over the next five years and make rich people in New York and California even richer.
In other words, liberal socialist Democrats want to pry $400 billion more in taxes from corporations run by uber-wealthy people, so they can turn around and give $500 billion back to those same rich people who live mostly in New York and California.
You can’t make this stuff up.
Ronald Reagan used to say, “The trouble with our liberal friends is not that they’re ignorant; it’s just that they know so much that isn’t so.”
The trouble is they don’t know how to do basic math. Perhaps the math curriculum in our nation’s schools has been failing for longer than we thought.