Democrats have asserted for years that the rich aren’t paying enough in taxes. In her Democratic National Convention speech in 2016, Hillary Clinton put it in the party's characteristically way, saying “Wall Street, corporations, and the super-rich are going to start paying their fair share of taxes.”
Never mind that, according to the most recent data, the “1 percent” pay more than 25 percent of all federal tax revenue, more than the bottom 60 percent of income earners combined. Democrats are usually loathe to give a specific number, but whatever the rich are paying, it isn't enough.
Or at least, that's how members of the party of the Left usually says things are. But they're not saying it so much right now. In their push for tax reform, Republicans are trying to eliminate tax breaks that primarily benefit those whom Democrats usually say aren't paying their fair share — upper-income earners who earn in the six figures.
What an ungrateful crowd those Democrats are. Instead of thanking the GOP for getting the well-off to pony up a bit more, they're acting as though the sky is falling. You think we're exaggerating? House Minority Leader Nancy Pelosi, D-Calif., actually said of the tax bill: “It is the end of the world. … This is Armageddon.”
What has happened? The answer is that Democrats are all for making the rich pay more as long as it's not their rich.
Republicans are trying to limit the deduction that can be taken against federal taxable income for state and local taxes paid. Pelosi and other Democrats representing high-tax states would prefer that low-income households claiming the standard deduction continue to subsidize wealthy households that claim the lion’s share of the value of the state and local tax deduction and the mortgage interest deduction.
Today, only about 30 percent of taxpayers itemize their deductions at all, and they're nearly all high-earning families. When the GOP tax reform bill doubles the standard deduction, even fewer Americans will bother to itemize. Those that do will skew even wealthier.
As of 2014, according to the nonpartisan Tax Foundation, 88 percent of the state and local tax deduction’s value was claimed by households earning more than $100,000 a year. Only 1 percent of the deduction’s value was claimed by those with annual incomes below $50,000.
Yet, Senate Minority Leader Chuck Schumer, D-N.Y., says eliminating the deduction will hurt “firefighters, police officers, and teachers.” Never mind that the Joint Committee on Taxation found that the bill would cut overall taxes for all income levels.
Democrats are also decrying a cap on the mortgage interest deduction. Rep. Elizabeth Esty, D-Conn., said a $500,000 home “may be a mansion in Mississippi, but there are absolutely middle-class families in Connecticut.” But Tax Foundation analysis found that capping the mortgage interest deduction would have virtually no effect on the incomes of the bottom 80 percent of income earners. It’s the 1 percent who would see their incomes fall as a result of that measure. Democrats are falling all over themselves, rending their garments, to save tax breaks for that 1 percent.
When the chips are down, Democrats care more about their wealthiest constituents than their poorer constituents. The latter group will benefit from the Republican tax bill's larger standard deduction. The truth is that the Democrats' populist tax rhetoric has been a complete fraud, a deceptive and self-serving camouflage for Republican promises to cut taxes, which would be widely and wildly popular if not so traduced.
Especially on the state and local tax deduction, Democrats' rhetoric has been all about protecting their pals in Democrat-led state legislatures who favor high state and local taxes. Indeed, part of the case made for those high taxes is that are federally deductible, so other people will end up subsidizing the payment of the check. High taxes go to fund their pals in public sector labor unions, who in turn fund Democratic politicians, who in turn protect the state and local tax deduction, and so on in an unending and unvirtuous circle.
A single mother from Pelosi’s district who earns $30,000 a year, has one child, and doesn’t itemize deductions pays about $800 a year in federal taxes. Thanks to a doubling of the standard deduction and the larger child tax credit in the Senate bill, her tax bill would drop to zero.
Democrats in Congress would rather keep money flowing to themselves and their friends rather than give this single mother an $800-a-year tax cut. Who's supporting tax breaks for the wealthy?
If GOP tax reform passes, liberal states will finally have to pay the full burden of the high taxes that their Democratic politicians impose. Perhaps the loss of the deduction will at last do something to teach voters to elect fiscally responsible governments. In New Jersey, Democratic legislative leaders are already considering reforming their tax code to mitigate the damage. That sounds like good news. Just imagine the beneficial ripple effect if the tax bill passes and becomes law.