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March 14, 2018

Democrats Propose a Tax Hike

 

You would think Democrats would be content for now to simply be the anti-Trump party. After all, that seems to be working for them.

But they just can’t help themselves. Last week, less than three months after the Republican’s tax reform\tax cut was passed, congressional Democrats released a detailed tax hike that they promise to implement should voters give them control of Congress in November.

As Ryan Ellis details in Forbes, Democratic leaders want to:

  • Raise taxes on the highest-income earners. Of course, this is no surprise, as Democrats ALWAYS want to raise taxes on high-income earners. Senate Democrats are proposing reinstating a top individual tax rate of 39.6 percent, which was lowered to 37 percent under the new law. 
  • Raise the corporate income tax rate. Democrats want to raise the new 21 percent corporate tax rate to 25 percent, which is a bit odd. Democrats now seem to be converts to the idea of a drastic corporate rate cut from the previous 35 percent—they just want it a little higher. 

    But less than three months after reform there is no empirical data to argue that the tax rate is “too low.” It’s worth noting that last October Senate Minority Leader Chuck Schumer was opposed to cutting the corporate tax rate from 35 percent. Now he supports 25 percent? There is no Democratic corporate tax philosophy other than “more”! 

  • Bring back the alternative minimum tax for 4 million families. For decades, the AMT has required millions of Americans to calculate their taxes twice, and pay the higher of the two calculations. This absurdity made eliminating the AMT a priority for Republicans; and as of 2018 the AMT is almost entirely eliminated. Bringing it back would be a mistake and would move toward more complexity and less simplicity. 

  • Raise the “Death Tax.” One of our most unjustifiable and inefficient taxes, the Republican reform doubled the estate tax exclusion, which will exempt most family farms and businesses. This leaves only the very wealthy exposed to the death tax, but Democrats want to again subject small family farms and businesses to this punitive tax.

Support for the GOP tax cut law is growing. Millions of Americans have already received bonuses and pay increases as a result, and the nonpartisan Tax Policy Center estimates that four out of five Americans will see a tax cut as a result of the new tax law.

If Democratic leadership thinks the way to respond to the Republican tax cut is to argue for tax increases, they may be throwing Republicans just the lifeline they need for the midterm elections.


 

  • TaxBytes-New

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