There’s an asymmetry at the heart of American politics

I have to get this off my chest. Last week, the House Ways and Means Committee released its proposed tax increases to fund President Biden’s $3.5 trillion social policy plan.

Here’s the big thing that hit me: Democrats didn’t go after the huge accumulations of wealth at the top – representing the largest share of the economy in more than a century.

You might have thought they’d be eager to tax America’s 660 billionaires whose fortunes have increased $1.8 trillion since the start of the pandemic – an amount that could fund half of Biden’s plan and still leave the billionaires as rich as they were before the pandemic began.

I mean, Elon Musk’s $138 billion in pandemic gains could cover the cost of tuition for 5.5 million community college students and feed 29 million low-income public-school kids, while still leaving Musk $4 billion richer than he was before Covid.

But House Democrats on Ways and Means decided to raise revenue the traditional way, taxing annual income rather than immense wealth. They aim to raise the highest income tax rate and apply a 3 percent surtax to incomes over $5 million.

Yet the dirty little secret – which House Democrats certainly know — is the ultra-rich don’t live off their paychecks.

Jeff Bezos’s salary from Amazon was $81,840 last year, yet he rakes in some $149,353 every minute from the soaring value of his Amazon stocks – which is how he affords five mansions, including one in Washington D.C. with 25 bathrooms.

House Democrats won’t even close the gaping “stepped-up basis at death” loophole, which allows the heirs of the ultra-rich to value their stocks, bonds, mansions, and other assets at current market prices — avoiding capital gains taxes on the entire increase in value from when they were initially purchased.

This loophole allows family dynasties to transfer ever larger amounts of wealth to future generations without it ever being taxed. Talk about an American aristocracy. We’re on the cusp of the largest inter-generational transfer of wealth in American history, as rich boomers pass it on to their millennial heirs. Closing this loophole may be our one big opportunity to stop this new aristocracy in its literal tracks.

Biden wanted to close this loophole, but House Democrats balked.

You might also have assumed they’d target America’s biggest corporations, awash in cash but paying a pittance in taxes. 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. Hell, Democrats even kept a scaled-back version of private equity’s “carried interest.” And listen to this: they retained special tax breaks for oil and gas companies.

What’s going on here? It’s not that House Democrats lack the legislative power. They’re in one of those rare trifectas when they hold a majority of the House plus a bare majority of the Senate and the presidency.

It’s not the economics. Americans have been subject to decades of Republican “trickle-down” nonsense and know full well nothing trickles down. Billionaires hardly need to have their fortunes grow $100,000 a minute to be innovative. And as I’ve stressed, there’s more money at the top, relative to anywhere else, than at any time in the last century.

Besides, Democrats need the revenue to finance their ambitious plan to invest in childcare, education, paid family leave, health care, and the climate.

So what’s holding them back?

Put simply, Democrats are reluctant to tax the record-breaking wealth of the rich and big corporations because of … the wealth of the rich and big corporations.

Many Democrats rely on that wealth to bankroll their campaigns. They also dread becoming targets of well-financed ad campaigns accusing them of voting for “job killing” taxes. (For the record, there’s no evidence that tax increases have “killed” jobs, especially when those tax increases have been targeted at higher incomes.)

Republicans have been in the pockets of moneyed interests at least since they championed Reagan’s tax cuts, regulatory rollbacks, and dismantling of labor protections. But the timidity of House Democrats shows just how loudly big money speaks these days even in the party of Franklin D. Roosevelt.

That’s partly because there’s so much less money on the other side. Through the first half of 2021, business groups and corporations spent nearly $1.5 billion on lobbying, compared to roughly $22 million spent by labor unions, and $81 million by public interest groups, according to OpenSecrets.org. Plus, the anti-taxers are well-organized. Thousands of industry groups, platoons of trade associations, every large corporation in America, along with small business associations — all are marching in step against corporate tax increases. There’s no similar pressure on the other side. How many pro-corporate-tax organizations can you name?

Progressive House Democrats will still have their say (AOC and other progressives will demand something more from the super-rich) and Senate Democrats haven’t yet weighed in (I’m sure Elizabeth Warren will continue to push her wealth tax).

But so far, the House Ways and Means Committee is where it all begins.

Let me step back a bit. The looming debate over taxes is really a debate over the allocation of wealth and power in America. As that allocation becomes ever more grotesquely imbalanced, this debate over wealth and power will loom ever larger over American politics.

Behind it will be this simple but important question: Which party stands up for average working people?

Democrats, take note.

Right now, Democrats are working to pass a $3.5 trillion package that will provide long overdue help for working Americans.

The final bill hasn’t yet been determined, so we don’t know the exact dollar amounts for all its policies. We’ll probably find that out in late September or early October. For now, the Democrats’ budget resolution frames what’s in the bill.

First, on families:

The bill would make permanent key benefits for working families, including the expanded child tax credit in the pandemic relief plan that sends families up to $300 per child each month but is now set to expire in December, and is estimated to cut child poverty by half.

It would also establish universal child care, for which low- and middle-income households would pay no more than 7 percent of their incomes.

And provide a national program of paid leave — worth up to $4,000 a month — for workers who take time off because they are ill or caring for a relative.

Next, on education:

The bill would reduce educational inequality by establishing universal pre-K for all 3- and 4-year-olds, benefiting an estimated 5 million children, and providing tuition-free community college – essentially expanding free public education from 12 years to 16 years.

It will also invest in historically Black colleges and universities and increase the maximum amount of Pell grants for students from lower-income families.

On health care:

The bill expands Medicare to include dental, vision, and hearing benefits and lowers the eligibility age. It also expands Medicaid to cover people living in the 12 states that have not yet expanded Medicaid, and makes critical investments to improve healthcare for people of color.

The big question is how far it will go to reduce prescription drug prices by, for example, allowing Medicare to negotiate prices with pharmaceutical companies. That could reduce Medicare and Medicaid spending, and free up more money for other parts of the bill. But Big Pharma is dead-set against this.

Big corporations and the rich picking up the tab:

In another step toward fairness, all of these are to be financed by higher taxes on the rich and big corporations.

The bill would also increase the Internal Revenue Service’s funding so the agency can properly audit wealthy tax cheats, who fail to report about a fifth of their income every year, thereby costing the government $105 billion annually.

In addition, the bill tackles the climate crisis, which also especially burdens lower-income Americans:

There are a range of solutions – subsidizing the use of solar, wind, nuclear and other forms of clean energy while financially penalizing the use of dirty energy like coal; helping families pay for electric cars and energy-efficient homes.

The bill might include something known as a carbon border adjustment tax — a tax on imports whose production was carbon-intensive, like many from China.

The bill would also establish a Civilian Climate Corps, and invest in communities that bear the brunt of the climate crisis.

And the bill helps American workers:

It will hopefully contain much of the PRO Act, the toughest labor law reform in a generation.

Finally, the bill includes a pathway to citizenship for undocumented immigrants. This is all about making America fairer.

Remember: we won’t know the exact details of the bill for at least a month, but these are the main areas that it will focus on. The big challenge will be ensuring Senate Democrats remain united to get it passed. All of us will need to fight like hell.

Don’t listen to spending hawks who claim it’s too expensive or too radical. For far too long, our government has ignored the needs of everyday Americans, catering instead to the demands of corporations and the super-rich. No more.

It’s time to get this landmark bill passed and build a fairer America.

Government deficits have gotten a bad rap, says economist Stephanie Kelton. In this groundbreaking talk, she makes the case to stop looking at government spending as a path towards frightening piles of debt, but rather as a financial contribution to the things that matter — like health care, education, infrastructure and beyond. “We have the resources we need to begin repairing our broken systems,” Kelton says. “But we have to believe it’s possible.”