One of my friends working in middle management for a big corporation has not just gotten very wealthy, he's also collected millions of dollars worth of the company's stock options and is trying to figure out a strategy for "lightening up." He keeps asking me if the Democrats have the votes to change the tax structure in ways that will no longer benefit people like him. And I keep telling him not to worry about anything substantial changing and that at best-- meaning from his perspective, at worst-- there will be just very marginal changes to the tax code, primarily because the Democratic Party is not unified around the issue and because there are enough Democrats from the Republican wing of the party to gum up the works.
Writing for the NY Times this morning, Jonathan Martin reported that the Democrats hope to ride the immense popularity of the COVID-Rescue package into a wave of history-defying midterm election victories. "Democratic leaders," he wrote, "are making one of the biggest electoral bets in years-- that the stimulus will be so transformational for Americans across party lines and demographic groups that Democrats will be able to wield it as a political weapon next year in elections against Republicans, who voted en masse against the package... If voters are to believe the Democrats are delivering on an American rebound, of course, it’s essential the country is roaring back to prepandemic strength in a way it was not at the end of 2009, when unemployment reached 10 percent."
So the news from Goldman Sachs this morning certainly was cheery for the Democrats. In a note to clients on Sunday night, Goldman economists, reported Axios, "raised their GDP growth expectations for the U.S. economy to 8% for 2021... If Goldman's forecast is correct, it would mark the largest economic expansion for the U.S. in generations. Not only would 8% annual growth denote a stupendous turnaround from the coronavirus pandemic, it would significantly outpace the firm's growth expectations for the U.S. from as recently as late 2020... [E]economic growth of 8% with inflation reaching just 2.1% would be almost unprecedented." The last time the U.S. enjoyed an 8% growth rate was while the New Deal policies were still building the most powerful middle class in history.
That all turned around in the 1950s when Republicans began winning elections. Today the GOP is reduced to howling at the moon and screaming about inflation worries. Still, corporate media hates the idea of tax increases. Take for example this morning's report from Bloomberg News. Their coverage looks like it was meant to be ominous: Biden Eyes First Major Tax Hike Since 1993 In Next Economic Package.
The explanation of tax increases being framed by the White House is not in terms of economic inequality issues but in terms of paying for the giant infrastructure/jobs bill being crafted in the House now. "Unlike the $1.9 trillion COVID-19 stimulus act," Nancy Cook and Laura Davidson reported, "the next initiative, which is expected to be even bigger, won’t rely just on government debt as a funding source... [I]t’s been increasingly clear that tax hikes will be a component-- Treasury Secretary Janet Yellen has said at least part of the next bill will have to be paid for, and pointed to higher rates. The tax hikes will mirror Biden's campaign promises and are likely to include repealing portions of Trump’s 2017 tax cuts for the wealthy and for corporations. The billionaire class and their congressional toadies are already whining about "changes to make the tax code more progressive." Some of the possibilities being discussed:
Raising the corporate tax rate to 28% from 21%
Paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnerships
Raising the income tax rate on individuals earning more than $400,000
Expanding the estate tax’s reach
• A higher capital-gains tax rate for individuals earning at least $1 million annually. (Biden on the campaign trail proposed applying income-tax rates, which would be higher.)
The Republicans have already started rendering their garments and screeching at the top of their lungs about inflation and, of course, about socialism!!!, which is how they view taxes. Insiders say all talk of tax hikes, will kill any kind of bipartisan deal on infrastructure, although even Joe Manchin said there can't be a meaningful infrastructure/jobs bill without tax hikes. There are, of course, some Blue Dogs and New Dems in the House who oppose any kind of meaningful tax increases, if not for the same reasons that Republicans do, then just because they are cowards and tremble at the thought of being called socialists during the upcoming midterms.
This is what should be included in the tax package... but won't be: