That is what the Democrats are pushing, and anyone who is surprised hasn’t been paying attention. Current polling shows that most people think Republicans, not Democrats, are the party of the working class, and they are right. Democrats represent, more than anyone else, wealthy urbanites in blue states who wrongly believe themselves to be “elite.” But these lefty urbanites have a serious problem: by virtue of living in blue states, they are heavily taxed. What to do about that? For a long time, the federal tax code included an unlimited deduction for state and local tax payments. Thus, working class taxpayers in low-tax states like South Dakota and Texas subsidized rich taxpayers in blue states like California, New York and Illinois.
That changed with the 2017 Tax Cuts and Jobs Act–one of the Trump administration’s signal achievements–which capped the deduction for state and local taxes at $10,000. Thus, the vast majority of blue state taxpayers kept their privileged tax treatment. The only ones who lost out were high-income blue staters who are now only partly subsidized by blue collar taxpayers in Tennessee and Florida.
But the Democratic Party’s core supporters are wealthy people in blue states, so restoring the full state and local tax deduction–eliminating the $10,000 cap–has been a top priority for Chuck Schumer, Nancy Pelosi, et al. Sure enough, the Democrats’ reconciliation bill–a Christmas package for the Left–would restore full deductibility, in order to benefit high-income blue-staters. Dan Crenshaw comments, with data from the Committee for a Responsible Federal Budget:
When “tax the rich” really means “let’s write catchy slogans on dresses but actually give the rich a $36,000 tax cut.”
Yes, this is what Democrats want to put in the reconciliation bill. No, this is not a joke.
Price hikes for you, tax cuts for rich New Yorkers. pic.twitter.com/bgGXLL4XWK
— Dan Crenshaw (@DanCrenshawTX) November 4, 2021
There is nothing surprising or controversial about this. When you eliminate a $10,000 cap on the state and local tax deduction, you obviously are only going to benefit high-income taxpayers. And you are doing nothing for middle-class taxpayers in states like Texas, Florida, Tennessee, and South Dakota that manage their finances wisely and don’t overtax their residents.
There is nothing necessarily wrong with being the party of the blue-state rich. Democrats just need to own it. That is who they are.
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