Want to fix the economy? Tax the rich

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Even though Congress is out of session this week, the fight for fair taxation continues.

House and Senate Democrats are still deciding what to do with the State and Local Tax (SALT) cap, which sets a limit on the amount of state and local taxes that taxpayers can deduct from their federal tax bills. The House plan would raise the cap from $10,000 to $80,000, creating a significant tax cut for wealthy Americans in blue states, while Senate Democrats want to repeal the cap only for middle and low income taxpayers.

We can’t discuss Build Back Better negotiations without mentioning infamous West Virginia Senator Joe Manchin and his unending dedication to making this process as slow and difficult as possible. This week, Manchin has said that he may delay voting on the Build Back Better Act due to concerns over rising inflation.

It’s true that inflation is on the rise, lifting up some prices of everyday items in stores around the country. But we believe that Manchin and other Senators’ fears over inflation may be overstated and misplaced. At the very least, fears of inflation are a terrible reason to delay voting on the Build Back Better Act.

Lastly, the richest man in the world, Elon Musk, has become a central figure this week in the tax policy debate thanks to his antics on Twitter. If anything, his behavior underscores the fact that it is high past time that wealthy people like him start paying their fair share in taxes.

This week, we’re shining a spotlight on these developments. We urge progressives to stay strong in the fight for tax fairness, even in the face of setbacks in Build Back Better negotiations and Twitter spats with high-profile billionaires.

Democrats at odds over SALT changes by Naomi Jagoda
House and Senate Democrats need to decide what to do about the SALT cap. The House has proposed lifting the cap from the current limit of $10,000 to $80,000, while Senators Sanders and Menendez have proposed keeping the $10,000 limit but exempting taxpayers making (tentatively) less than $400,000. Both proposals are better than outright repeal of the cap, but we believe that the Senate plan provides a better path forward in the fight for tax fairness. While the House plan would give a tax cut to lower-income taxpayers in high tax states like New York and New Jersey, it would also give a much more substantial tax cut to high earners in those states.

Manchin may delay Biden social spending plan over inflation by Hans Nichols
The progressive worry that moderates will not keep their promise to hold a vote on the Build Back Better Act appears to be well-founded, with Senator Manchin suggesting this week that he may delay voting on the Act due to concerns over rising inflation. Manchin is right about inflation: prices did rise 0.9% over the last month, bringing the annual inflation rate to 6.2%. But he isn’t right to use this to delay a vote on the Build Back Better Act. The way to fix inflation isn’t to do nothing – it’s to invest in expanding the American economy’s productive capacity while also reducing the monetary supply by taxing the rich (i.e. exactly what is in the reconciliation bill that Manchin wants to delay).

Inflation Is Good for You by Jon Schwarz
There’s another reason why Senator Manchin should not use inflation as an excuse to delay voting for the Build Back Better plan: despite the fear-mongering, inflation is not always a bad thing, at least not in the current economic climate. Yes, prices are up from last year, but so are wages for most Americans. Moreover, inflation can be a good thing because it lowers the real value of debt. The average American has about $65,000 in debt and inflation has actually lowered the real value of that debt by roughly $4,000. The only people who truly stand to lose from inflation are wealthy creditors, like the mega-rich donors of Senator Manchin.

Elon Musk once again proves the need for a billionaire tax by Helaine Olen
This past Saturday, Elon Musk polled his 63 million Twitter followers, asking whether he should sell 10% of his Tesla stock. This was purportedly done in response to Senator Wyden’s billionaire income tax proposal as a way to “magnanimously” pay tax on his unrealized capital gains. Wyden himself responded to the tweet asserting that whether billionaires like Musk should pay tax should not be decided by a Twitter poll. Senator Wyden is right – the decision to tax the wealthy and corporations should be left to all Americans, not just Musk’s Twitter followers. Musk may not be happy about that, though, because they made it clear for some time now that they want the rich to pay their fair share in taxes.

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