This week, House Democrats released their tax hike proposals to fund Joe Biden’s $ 3.5 billion social policy plan.
The biggest surprise: They haven’t tackled the massive accumulations of wealth at the top – making up the biggest chunk of the economy for over a century.
You might have thought Democrats would be eager to tax the 660 U.S. billionaires whose fortunes have increased by $ 1.8 billion since the start of the pandemic, an amount that could fund half of Biden’s plan and leave the billionaires as rich as they were before the start of the pandemic.
Elon Musk’s $ 138 billion pandemic earnings, for example, could cover the tuition fees of 5.5 million community college students and feed 29 million low-income public school children, while leaving Musk $ 4 billion richer than he was before Covid.
But top House Democrats have decided to increase income the traditional way, taxing annual income rather than giant wealth. They aim to increase the top tax rate and apply a 3% surtax on income over $ 5 million.
The dirty little secret is that the ultrarich don’t live on their wages.
Amazon’s Jeff Bezos salary was $ 81,840 last year, but he’s making around $ 149,353 every minute from the soaring value of his Amazon shares, which is how he buys himself five mansions, including one in Washington DC which has 25 bathrooms.
House Democrats won’t even close the yawning loophole of the ‘hardened base at death’, which allows heirs of the ultra-rich to value their stocks, bonds, mansions and other assets at current market prices – avoiding taxes on capital gains on any increase in value since their purchase.
This loophole allows family dynasties to transfer ever greater amounts of wealth to future generations without ever being taxed. Talk about an American aristocracy.
Biden wanted to close that loophole, but House Democrats balked.
You might also have assumed that the Democrats would target America’s biggest corporations, inundated with cash but paying a paltry sum in taxes. Thirty-nine of the S&P 500 or Fortune 500 paid no federal income tax from 2018 to 2020 while reporting a combined profit of $ 122 billion to their shareholders.
But remarkably, House Democrats have decided to set corporate tax rates below the level they were at when Barack Obama was in the White House. Democrats have even kept downsized versions of notorious corporate flaws such as private equity “deferred interest”. And they kept special tax breaks for oil and gas companies.
What is happening? It’s not that Democrats don’t have the power. They are in one of those rare trifles when they hold the presidency and majorities, albeit small, in the House and Senate.
It’s not the economy. Americans have been subjected to decades of Republican nonsense and know full well that nothing goes. Billionaires hardly need to grow their $ 100,000 a minute fortune to be innovative. And as I pointed out, there is more money at the top, compared to anywhere else, than at any time in the last century.
In addition, Democrats need the income to fund their ambitious plan to invest in child care, education, paid family leave, health care and the climate.
So what’s holding them back?
Simply put, Democrats are reluctant to tax the record wealth of the rich and big business because of… the wealth of the rich and big business.
Many Democrats rely on this wealth to fund their campaigns. They also fear becoming the target of well-funded advertising campaigns accusing them of voting for “job-killing” taxes.
Republicans sold their souls to wealthy interests a long time ago, but the shyness of House Democrats shows how loud money talks these days, even in Franklin D Roosevelt’s party.
This is because there are a lot less on the other side. In the first half of 2021, business groups and businesses spent nearly $ 1.5 billion on lobbying, compared to about $ 22 million spent by unions and $ 81 million by public interest groups , according to OpenSecrets.org.
Progressive House Democrats will always have their say. The Democrats in the Senate did not weigh. But there is cause for concern.
The looming debate on taxes is really a debate on the distribution of wealth and power. As this allocation becomes more and more grotesquely unbalanced, this debate will weigh more and more on US policy.
Behind it, there will be this simple but important question: which party represents the average workers and which accomplices for the rich? Democrats, take note.