WASHINGTON ― Bernie Sanders would tax plutocratic estates. Elizabeth Warren would apply an annual “wealth tax” to fortunes above $50 million. Alexandria Ocasio-Cortez has pitched a 70% top tax rate for multimillionaires.
But for Democrats in charge of the House of Representatives, taxing the rich has been more of an abstract goal than an actual policy priority.
House Speaker Nancy Pelosi (D-Calif.) spoke Wednesday at a “Tax the Rich” rally on the National Mall without actually mentioning a single new tax proposal.
After the rally, HuffPost asked Pelosi whether there were any tax hikes she favored. She said Democrats should revisit the Tax Cuts and Jobs Act that Republicans rushed to President Donald Trump’s desk at the end of 2017, but suggested no specific changes.
“I mean, that was a ridiculous scam,” Pelosi said, before ducking into a car.
The 2017 legislation lowered taxes for most households, but it was the wealthiest 5% of taxpayers who reaped the biggest benefit. Democrats have muddied their “tax scam” message, however, by loudly criticizing a provision of the law that actually did impose higher taxes on some wealthy households by limiting a federal deduction for state and local taxes.
The House Ways and Means Committee has held multiple hearings this year on the tax law, including one focused solely on the so-called SALT cap, which allows households to write off only $10,000 of what they pay their state and local governments.
The provision clobbered wealthy households in liberal jurisdictions that use high taxes to fund schools and other social services. At a Ways and Means hearing last month, Democrats complained the cap essentially attacked local governance. David Tarter, the mayor of the D.C. suburb Falls Church, Virginia, testified that while his city’s residents may have high incomes ― median household income is $114,795, almost twice the national median ― the cost of living is high and the taxes are high because they pay for great schools.
“There are no yachts in Falls Church, just lots of hard-working families trying to get by in the high rent district,” Tarter said.
Still, there’s no question about which income bracket would gain the most from lifting the SALT cap. If the provision were repealed, 94 percent of the households that would benefit have annual incomes exceeding $100,000, according to the congressional Joint Committee on Taxation. More than half have incomes above $1 million.
On the other hand, there were plenty of giveaways to the wealthy in the Republican tax law that most Democrats opposed, such as its slashing of the corporate tax rate from 35% to 21% and its weakening of the estate tax, which applied to only the richest 0.2% of households even before Republicans doubled the amount of assets that are exempt from the tax.
Ways and Means Chair Richard Neal (D-Mass.) has floated the idea of raising the corporate tax rate by 1% to offset the cost of increased tax benefits for low-income workers ― although Neal also said the proposal is mainly a negotiating ploy to make Republicans less hostile to his other priorities.
The more ambitious policy ideas, which have little chance of becoming law with Republicans running the Senate, are coming from the likes of Sens. Sanders (I-Vt.) and Warren (D-Mass.) and Rep. Ocasio-Cortez (D-N.Y.).
Journalists have treated Ocasio-Cortez’s proposal to set a top marginal tax rate of 70% like it’s a radical suggestion, but relative to recent history, it’s not. In the 1970s, a 70% tax rate applied to joint income above $215,000; Ocasio-Cortez suggested applying that rate to dollars earned above $10 million. The current top rate is 35% on joint incomes above $408,000.
Tax March, an organization founded in 2017 to pressure President Donald Trump to release his tax returns, put on the Wednesday rally as part of a “Tax The Rich” bus tour visiting more than a dozen U.S. cities. The group hasn’t endorsed a specific tax policy, but has been trying to drum up grassroots support for the general idea of higher taxes on the rich. (Soaking the rich is, indeed, quite popular.)
At the event, Pelosi, along with Reps. Ilhan Omar (D-Minn.), Brendan Boyle (D-Pa.) and Raul Grijalva (D-Ariz.), talked up the broader Democratic agenda. Pelosi cited proposals for a higher minimum wage and the For the People Act, a bill the House passed earlier this year that would reform election procedures and campaign finance and impose new ethics rules in all branches of government. She pointed to Republican comments about the need to cut taxes in order to benefit their campaign donors.
“The relationship between money in politics and their tax scam is very direct,” she said.
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