Hoover Institution Distinguished Visiting Fellow Kevin Hassett discusses inflation and how the Biden administration is responding to the surge in prices.
A majority of millionaires would receive a tax cut under the newest reconciliation framework unveiled by House Democrats, according to a new analysis published this week.
The non-partisan Tax Policy Center found that two-thirds of people making more than $1 million a year would see an average tax cut of $16,800 next year.
That’s largely because a coalition of House Democrats are seeking to repeal a Trump-era limit on state and local tax deductions as part of President Biden‘s signature economic plan.
BIDEN PITCHES REVAMPED MILLIONAIRES TAX, GLOBAL MINIMUM TO FUND SPENDING BILL
The so-called SALT deduction cap, which is poised to sunset in 2026, limits the amount of state and local taxes that Americans can deduct from their federal taxes to $10,000. Centrist Democrats have been pushing for months to include a full repeal in the president’s $1.75 trillion “Build Back Better” plan, but have faced opposition from left-wing lawmakers.
Under the latest proposal currently being considered by the House Rules Committee, the deduction cap would rise from $10,000 to $72,500 for five years (it would be retroactive to 2021). The measure would then extend the cap through 2031.
The analysis is certain to exacerbate intra-party fighting between progressives and moderates over what to do about the limitation, as temporarily eliminating it would require Democrats to vote for a policy that disproportionately benefits wealthy Americans living in blue coastal states.
Sen. Bernie Sanders, I-Vt., blasted reports that a SALT repeal may be included in the family and climate spending plan, calling it “unacceptable.”
“At a time of massive income and wealth inequality, the last thing we should be doing is giving more tax breaks to the very rich. Democrats campaigned and won on an agenda that demands that the very wealthy finally pay their fair share, not one that gives them more tax breaks,” Sanders said in a statement. “I am open to a compromise approach, which protects the middle class in high-tax states. I will not support more tax breaks for billionaires.”
With a slimmest possible 50-50 Senate majority, it would be tenable for Sanders to sink a spending package that includes a full SALT repeal.
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House Ways and Means Committee Chairman Richard Neal, D-Mass., told reporters Tuesday that discussions on the deduction cap are ongoing.
Biden did not include a SALT repeal in the framework that he unveiled last month, but the White House has previously said it’s open to eliminating the deduction cap.
“It is not a revenue raiser and so it would add costs, and potentially significantly, to a package,” White House press secretary told reporters over the summer. “There’d have to be a discussion about how that would be paid for what would be taken out instead. And then there’s sort of a discussion of what’s most important to achieving our overarching objectives.”
Even though it would cut taxes for most millionaires, the spending plan would also raise tax bills of most people with seven-figure incomes, who would pay – on average – $68,000 more, TPC estimates. One-third of millionaires would face tax increases averaging $228,000.
