{"id":30589,"date":"2021-10-18T20:04:59","date_gmt":"2021-10-19T01:04:59","guid":{"rendered":"https:\/\/sites.imsa.edu\/acronym\/?p=30589"},"modified":"2021-10-18T20:04:59","modified_gmt":"2021-10-19T01:04:59","slug":"democrats-want-to-tax-the-very-rich-stop-saying-its-radical","status":"publish","type":"post","link":"https:\/\/sites.imsa.edu\/acronym\/2021\/10\/18\/democrats-want-to-tax-the-very-rich-stop-saying-its-radical\/","title":{"rendered":"Democrats Want to Tax the Very Rich: Stop Saying it&#8217;s Radical"},"content":{"rendered":"<p><span style=\"font-weight: 400\">Many of the spending items in the tax bill Democrats are negotiating could be described as radical. After all, if we had reduced the cost of child care, expanded educational access, reduced poverty, and more efforts to fight climate change, <\/span><a href=\"https:\/\/www.nytimes.com\/2021\/09\/23\/us\/politics\/biden-wealthy-tax-rates.html\"><span style=\"font-weight: 400\">our lives would be so much better<\/span><\/a><span style=\"font-weight: 400\">.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">But there\u2019s nothing radical about how Democrats are proposing we pay for these changes. Many Republicans, and even some Democrats, however, are proposing that this bill is the start of great change in America.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">It\u2019s really not.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">Here are some <\/span><a href=\"https:\/\/www.washingtonpost.com\/opinions\/2021\/09\/13\/lets-stop-pretending-biden-tax-increases-are-radical\/\"><span style=\"font-weight: 400\">major features of the multiple different proposals<\/span><\/a><span style=\"font-weight: 400\"> being circulated:&nbsp;<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The top income tax rate would rise from <\/span><a href=\"https:\/\/www.cnbc.com\/2021\/04\/29\/how-biden-tax-plan-would-hit-the-wealthy.html\"><span style=\"font-weight: 400\">37 to 39.6 percent<\/span><\/a><span style=\"font-weight: 400\"> for various categories of earners who make $400,000 to $500,000 a year and more.<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">It would <\/span><a href=\"https:\/\/www.washingtonpost.com\/us-policy\/2021\/09\/13\/democrats-tax-biden-budget\/\"><span style=\"font-weight: 400\">raise the corporate tax rate from 21 to 26.5 percent<\/span><\/a><span style=\"font-weight: 400\">, but only for large companies with more than $5 million in annual income. Smaller companies would either see their tax rate stay the same or, in some cases, decline.&nbsp;<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The top tax rate on capital gains would <\/span><a href=\"https:\/\/www.washingtonpost.com\/us-policy\/2021\/09\/13\/democrats-tax-biden-budget\/\"><span style=\"font-weight: 400\">rise from 20 to 25 percent<\/span><\/a><span style=\"font-weight: 400\">, which is still a lower rate than wage income. This would also continue with the preferential treatment that is lavished on wealthy investors.&nbsp;<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">If someone were to make more than $5 million a year, they would be facing a new<\/span><a href=\"https:\/\/www.washingtonpost.com\/us-policy\/2021\/09\/13\/democrats-tax-biden-budget\/\"><span style=\"font-weight: 400\"> 3 percent surtax<\/span><\/a><span style=\"font-weight: 400\">. (A surtax is an additional tax on something that\u2019s already been taxed.)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The <\/span><a href=\"https:\/\/www.irs.gov\/\"><span style=\"font-weight: 400\">Internal Revenue Service<\/span><\/a><span style=\"font-weight: 400\"> would be given new funds to go after the hundreds of billions of dollars of taxes that go unpaid every year.&nbsp;<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The new bill would allow Medicare to negotiate with drug prices. Currently, Medicare is prohibited from negotiating prices. This makes it that <\/span><a href=\"https:\/\/thehill.com\/opinion\/healthcare\/369727-us-drug-prices-higher-than-in-the-rest-of-the-world-heres-why\"><span style=\"font-weight: 400\">Americans pay the highest prices for medication in the world<\/span><\/a><span style=\"font-weight: 400\">.&nbsp;<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">Even some Democrats believe these reforms are radical and are pushing them to the right because of it. In fact, House Democrats have <\/span><a href=\"https:\/\/www.huffpost.com\/entry\/democrats-capital-gains-taxes_n_613f6d89e4b00ff836efff68?w5g\"><span style=\"font-weight: 400\">drafted a version of the tax proposal that omits a provision<\/span><\/a><span style=\"font-weight: 400\"> sought by President Biden that would close a loophole allowing the wealthy to pass large estates down to heirs with much of it escaping taxation permanently.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">Conservative Democrats are worried about being accused of hurting family farms. In turn, the Democrats who are afraid of this are letting the Republican lie that estate taxes targeting multi-million-dollar fortunes hurt family farms get repurpose to be applied to the so-called \u201cstepped-up basis.\u201d&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">The stepped-up basis involves assets that are held and not taxes throughout a wealthy person\u2019s life and are then passed on to an heir. These assets are only taxed at the point of sale, based on how much value they gained. The appreciation of their value is calculated for future tax purposes only by measuring that appreciation from that point of transfer onward. This cancels the gains that occurred up to that point meaning that no one is ever taxed.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">However, <\/span><a href=\"https:\/\/www.washingtonpost.com\/opinions\/2021\/09\/13\/lets-stop-pretending-biden-tax-increases-are-radical\/\"><span style=\"font-weight: 400\">according to a senior Senate Democratic aide<\/span><\/a><span style=\"font-weight: 400\">, \u201cthe current negotiations had already carved out an exemption for family-owned farms that would only tax gains valued from $25 million and up.\u201d With this exemption, it\u2019s hard to see how it would permit any actual harm to any family farms.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">If the provision does die, however, tons of wealth could escape taxation permanently. All of this comes from the idea that there\u2019s anything remotely radical about Biden\u2019s tax plans.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">While \u201ctrillions of dollars in new taxes\u201d does sound very scary &#8212; especially to the average person &#8212; the tax plans are much more than that.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">The package would raise and spend <\/span><a href=\"https:\/\/www.washingtonpost.com\/opinions\/2021\/09\/13\/lets-stop-pretending-biden-tax-increases-are-radical\/\"><span style=\"font-weight: 400\">$3.5 million <\/span><i><span style=\"font-weight: 400\">over 10 years<\/span><\/i><\/a><span style=\"font-weight: 400\">, which would only be $350 billion a year. That\u2019s less than 2 percent of our current gross domestic product. In fact, last year\u2019s gross domestic product was a total of <\/span><a href=\"https:\/\/fred.stlouisfed.org\/series\/GDP\"><span style=\"font-weight: 400\">$21 trillion<\/span><\/a><span style=\"font-weight: 400\">.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">All in all, it is a substantial increase in taxes and spending, but not something that\u2019s going to transform the American economy.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">All of that, however, is on a large scale. What about the individuals? Who will be affected? How will billionaire investors be affected? Wealthy tax cheats? Corporations that drag in billions of dollars every year and ignore their taxes on top of it?&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">They\u2019re all going to be okay.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">Many of the changes that Democrats want to make are simply reversing parts of the <\/span><a href=\"https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/\"><span style=\"font-weight: 400\">Republicans\u2019 2017 tax cut<\/span><\/a><span style=\"font-weight: 400\">. Paying taxes like how we did five years ago is nowhere near a radical change.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">The overall, big picture is that the 2017 tax cut was the height of a period of relentless tax-cutting for the wealthy and corporations dating all the way back to the 1980s. In 1980, <\/span><a href=\"https:\/\/taxfoundation.org\/70-tax-rate-entrepreneurial-income\/#:~:text=However%2C%20according%20to%20Saez%20and,ever%20did%20to%20imposing%20a\"><span style=\"font-weight: 400\">the top marginal income tax rate was 70 percent<\/span><\/a><span style=\"font-weight: 400\">, which is about twice what it is now. The rich spent twice as much on taxes but half the time whining about how oppressed they were by taxes than they do today.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">That period of tax-cutting was real. What Democrats are currently attempting is nothing more than a little nudge toward the right direction. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many of the spending items in the tax bill Democrats are negotiating could be described as radical. After all, if we had reduced the cost&#8230;<\/p>\n","protected":false},"author":577,"featured_media":30590,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[12],"tags":[3521,1234,2840],"coauthors":[3428],"class_list":["post-30589","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinions","tag-biden","tag-politics","tag-taxes"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/posts\/30589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/users\/577"}],"replies":[{"embeddable":true,"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/comments?post=30589"}],"version-history":[{"count":7,"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/posts\/30589\/revisions"}],"predecessor-version":[{"id":30826,"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/posts\/30589\/revisions\/30826"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/media\/30590"}],"wp:attachment":[{"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/media?parent=30589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/categories?post=30589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/tags?post=30589"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/sites.imsa.edu\/acronym\/wp-json\/wp\/v2\/coauthors?post=30589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}