A $285 billion tax cut that would predominantly flow to rich households is now the second most expensive component of the Build Back Better Act after corporate Democrats succeeded in slashing funding for a number of key progressive priorities—and removing other programs entirely.
With the House of Representatives preparing to vote later this week on the roughly $1.8 trillion reconciliation package, the Washington Post reported Tuesday that Democrats’ plan to raise the cap on state and local tax (SALT) deductions from $10,000 to $80,000 through 2026 would be “more costly than establishing a paid family and medical leave program, and nearly twice as expensive as funding home-medical services for the elderly and disabled.”
“Over the next five years, raising the SALT cap would provide a tax cut only to those who itemize their taxes and pay more than $10,000 in state and local taxes—a group overwhelmingly made up of the wealthy,” the Post noted. “A recent analysis from the Tax Policy Center says the tax cut will benefit primarily the top 10% of income earners, with almost nothing flowing to middle- and lower-income families.”
The only part of the Build Back Better package that’s currently larger than the proposed SALT cap increase is the legislation’s universal pre-K and affordable child care programs, both of which progressive critics warn are deeply flawed and have been pared back in recent weeks to appease right-wing Democrats.
“As the Build Back Better bill makes its way through Congress, significant changes are being made to the various proposals, generally for the worse,” Matt Bruenig of the People’s Policy Project noted last week. “Hollowed-out versions of older proposals are limping to the finish line and it’s a completely different bill at this point.”
Pretty wild that the 2nd largest BBB measure will give a hefty tax cut to richer Americans.— Joseph Zeballos-Roig (@josephzeballos) November 16, 2021
It'll get over *2x* the funding compared to the one-year child tax credit expansion for middle/lower-income people
Via @alyssafowers @Ducroquet https://t.co/FpSbS9YoCQ pic.twitter.com/5Mb7O2oHPW
The proposal to lift the SALT cap—which was created by the GOP’s 2017 tax law—was added to the reconciliation package largely at the behest of a small group of corporate Democrats who threatened to tank any bill that omitted an increase.
“No SALT, no deal,” Rep. Tom Suozzi (D-N.Y.) said in a recent statement, a message that other right-wing Democrats readily echoed.
Last month, after President Joe Biden privately floated leaving SALT changes out of the reconciliation package, Senate Majority Leader Chuck Schumer (D-N.Y.) reportedly intervened to rescue the tax break, which one analysis estimates will deliver an average tax cut of $16,760 to U.S. millionaires.
Outraged by the SALT proposal’s regressivity, Sen. Bernie Sanders (I-Vt.) told reporters on Tuesday that he’s currently working on a compromise plan that would limit the provision’s benefits for the wealthy.
“I am working with some of my colleagues to make sure that we come up with a proposal that protects the middle class, but does not end up with an overall reconciliation bill in which millionaires are better off tax-wise than they were under [former President Donald] Trump,” said Sanders, the chair of the Senate Budget Committee.
Yes. In terms of SALT we must protect the middle class from high local and state taxes. But we cannot provide 39% of the benefits to the top 1% – as is in the House bill. At a time of massive income inequality we must increase taxes on the 1%, not give them huge tax breaks.— Bernie Sanders (@SenSanders) November 9, 2021
Progressives have also raised alarm over the political toxicity of handing rich households a major tax cut in a bill that’s ostensibly dedicated to combating the climate crisis, improving the nation’s tattered social safety net, and finally making the wealthy pay their fair share.
“After Democrats gutted their wildly popular initiatives to expand Medicare and lower drug prices, the tax initiative has now become one of the most expensive provisions in the entire Build Back Better legislation,” The Daily Poster‘s David Sirota wrote Tuesday. “The whole initiative seems deliberately sculpted to hand the American right a weapon to bludgeon Democrats ahead of the election.”
Right-wing groups are already attempting to do just that. On Tuesday, Heritage Action announced a $1.25 million ad buy targeting Reps. Carolyn Bourdeaux (D-Ga.), Cindy Axne (D-Iowa), Jared Golden (D-Maine), Elissa Slotkin (D-Mich.), and Susie Lee (D-Nev.) over the SALT provision.
“Their latest plan is to give $200 billion in blue state bailouts to their rich friends at the expense of all other Americans,” declares the ad, which will run on television and online.
Watch the spot focused on Congressman Golden and aimed at Maine voters:
In an email on Tuesday, the Patriotic Millionaires—a group that supports higher taxes on the rich—argued that “the last people who need government assistance right now are the well-off taxpayers who would be most affected by” the SALT cap change.
“Wealthy Americans already have so many advantages over everyone else—it is high time that we pay more, not less, in taxes,” the group wrote. “This choice isn’t happening in a vacuum. Democrats have already cut trillions of dollars of vital aid for American families from their reconciliation plan. Adding a significant tax cut for the wealthiest Americans on top of this would be adding insult to injury.”