LTP News Sharing:
Biden’s “Build Back Better” spending plan is a benefit to the rich.
“For all their talk about increasing taxes on the rich, the Democrats’ budget reconciliation plan might actually result in a tax cut for high-income households,” writes Project 21 Co-Chairman Horace Cooper in a RealClearPolicy commentary. “The latest addition to their reconciliation bill is a provision to raise the cap on state and local tax (SALT) deductions from $10,000 to $72,500 for ten years.”
He notes that, according to the nonpartisan Citizens for a Responsible Federal Budget, “this giant tax cut for the rich is now one of the most expensive parts of the Build Back Better plan.”
This is how messing with the SALT cap would benefit the lifestyles of the rich and liberal:
[A] SALT cap repeal would overwhelmingly benefit high-earners from the progressive states they represent. One study found that more than 50 percent of the benefits of a full SALT repeal would go to taxpayers in just four states: California, New York, New Jersey and Illinois. And a SALT cap increase would likely do the same. What do these states all have in common? Progressive governance and some of the highest state and local taxes in the nation.
This, in turn, hurts the smaller states and the hardworking taxpayers who live in them:
Americans pay federal taxes in exchange for a wide array of federal services. This huge increase in the SALT cap would result in similarly situated taxpayers in low-tax states paying more for those services than those living in high-tax states — an unfair income transfer from low-tax states to high-tax ones.
One example of how changing the SALT cap even kneecaps Biden’s own plans can be seen in his drug-pricing scheme. By letting the government fix the price of prescription drugs, the White House claims it will save $250 billion. But, while such a move would hobble drugmakers’ ability to innovate and research, it will do nothing to actually build back Medicare:
[N]one of that money will go towards shoring up the Medicare program as it heads into bankruptcy. Instead, those savings will be used to partially cover the cost of a tax cut for higher-income earners in certain progressive high-property-tax states.
“The reconciliation bill is clearly an incoherent mess that purports to favor the little guy while doing the opposite,” Horace remarks.
To read all of Horace’s RealClearPolicy commentary – “Building Back Better for the Wealthy” – click here.
Author: David Almasi