Whose Ox Is Going To Be Gored By Biden's Tax Proposal?-- Part II (Hint: Not You)

Biden is no AOC... but he's moving in the right direction

This morning, Chicagoland progressive congresswoman Marie Newman told me that "The best kept secret so far in the Biden administration is lower and middle income folks have already had their taxes cut in the last two months and they will receive more good news in the coming months." Her lips to God's ears. My worry is that Republicans and DINOs will prevent middle class tax cuts with their trenchant opposition and absurd demands for phony bipartisanship and surrender-disguised-as-compromise.

Do you know what else conservatives in both parties are fight for with such tenacity? Tax cuts for the middle class. That's part of what progressive taxation they abhor so vehemently is also about. DINOs like Joe Manchin, Kyrsten Sinema and Maggie Hassan in the Senate and Josh Gottheimer, Abigail Spanberger and Scott Peters in the House aren't just trying to protect corporate donors and the super-wealthy-- how many people do you know who make over a million dollars a year?-- they are trying to prevent Biden's tax cut for their own constituents!

This morning, Brian Faler's Politico piece, Not rich? Good news: You’re probably getting a tax cut, explains the White House tax plan more fully than corporate media has thought was necessary. "Everyone knows that Democrats want to raise taxes on the rich, but what hasn’t gotten nearly as much notice is how much they’ve cut them for most everyone else-- substantially more than Republicans did in the first year of their 2017 tax overhaul. New estimates by Congress’s official forecasters show Democrats’ tax cuts-- included in their March stimulus package-- will drive down tax rates on low- and middle-income people so much this year that those earning less than $75,000, on average, will owe nothing in federal income taxes. Those making between $75,000 and $100,000 will pay a scant 1.8 percent average tax rate this year, the nonpartisan Joint Committee on Taxation predicts."

Why would Joe Manchin and Kyrsten Sinema oppose that so vehemently? Democrats in their states should ask themselves and start preparing for primaries even though they are years away. Believe me, both Manchin and Sinema are socking away corporate and lobbyist cash right now. They'll be ready; will the working and middle class voters whose oxen they are goring be ready?

This sounds like what Democrats should go into the midterms fighting for: "That will shift the relative burden to the wealthy, at least temporarily, with those earning more than $500,000 expected to pay more than two-thirds of all income taxes this year." Fair taxation is very popular with voters. But instead we have the whole Austerity-obsessed Republican wing of the Democratic Party-- Blue Dogs, New Dems, No Labels, Problem Solvers-- working with the Republicans to stop the tax breaks for the middle class.

As Faler pointed out, "It’s a flip side to Democrats’ campaign to raise taxes on the well-to-do, though one that’s sometimes overlooked. Much of the focus has been on their bid to raise taxes on wealthy individuals and corporations to help pay for big new spending initiatives."

At a cost of $492 billion, Democrats’ tax cuts are among the largest one-year reductions ever approved by Congress (by comparison, the GOP's 2017 package reduced taxes by $136 billion in the first year; their $1.5 trillion price tag was the cost over 10 years).

The cuts are a big reason why individual income taxes are now projected to plummet this year by one-third to $1.22 trillion, from $1.8 trillion.

Much of the tax cuts came in the form of stimulus checks, though Democrats also dramatically expanded the Child Tax Credit, beefed up a break for dependent care expenses and expanded the Earned Income Tax Credit. Unlike the 2017 cuts, all of those provisions were aimed at average Americans, with sharp income cutoffs.

A new JCT report examining how much people at different income levels will pay this year shows the net results.

Those earning between $30,000 and $40,000 will owe nothing in income taxes and, thanks to refundable tax credits, get back an average of $3,500 per return-- more than three times as much as JCT said in 2019, the last time it examined the issue.

Refundable credits allow people to receive checks for the difference when the break exceeds their tax bill.

The approximately 28 million returns reporting between $50,000 and $70,000-- on which people had collectively owed $41 billion in 2019-- this year will actually be paid $33 billion by the IRS. (Though people in that income group, on average, will pay nothing, results will vary within that cohort, with some people owing the IRS. Also, JCT examined rates by returns filed, rather than by individuals or households.).

High earners, excluded from Democrats’ tax cuts, would see their average tax burdens essentially unchanged from 2019. Those making between $500,000 and $1 million will pay 20.8 percent of their earnings in income taxes. People earning more than $1 million will pay 25.8 percent.

“JCT’s report is proof that-- both directly and indirectly-- Democrats have been delivering relief from this terrible pandemic to Americans in need,” said House Ways and Means Committee Chair Richard Neal (D-MA). “Levying taxes in a fair, progressive manner, without taxing the lowest income taxpayers into poverty is how the tax code should work, and a top priority for us.”