President Biden is testing the bounds of political goodwill accrued from passage of his popular $1.9 trillion spending plan with a forthcoming proposal to increase taxes on corporations and the so-called wealthy.
Biden campaigned last year on raising taxes and is poised to pair his proposal with legislation to finance a major infrastructure boom. Corporate tax rates would jump from 21% to 28%, while a range of tax hikes would hit people earning more than $400,000 annually. This comes on the heels of the American Recovery Plan, signed into law Thursday.
Infrastructure spending polls well, and taxes, as an issue, is not the political bludgeon it once was for Republicans. But they believe its salience with fiscally conservative suburban voters could boost the GOP in 2022, returning to the fold those who drifted left in reaction to former President Donald Trump — if Biden pushes a partisan, Democratic tax hike through Congress.
“I’d welcome President Biden reminding suburban voters why they are center-right, especially on tax and economic issues,” said Liesl Hickey, a Republican strategist and founder of N2 America, a GOP-aligned political nonprofit group that studies suburban voters.
HISTORIC FEDERAL TAX INCREASES NEXT UP FOR BIDEN AFTER $1.9 TRILLION SPENDING BILL
N2 America has been conducting regular focus groups with suburban voters this year. In one session, held in January around the time of Biden’s inaugural and the Democratic takeover of the Senate, Hickey said voters organically voiced two concerns when asked what worried them about full Democratic control of Washington. According to focus group data provided by N2 America:
- “Suburban voters aren’t excited about Dems having full control. These voters ‘prefer to have some of the power divided between the branches so that nothing extreme will be passed.’”
- “By the far biggest concern voters have with Dems in charge are ‘higher taxes and higher prices everywhere.’”
Trump enacted a $1.3 trillion overhaul of the tax code in late 2017 that cut income taxes across the board and slashed corporate taxes in an effort to make the United States more globally competitive. Biden claims the Tax Cuts and Jobs Act benefited businesses and so-called wealthy earners at the expense of the middle class and the poor and is using the populist message of “fairness” to promote his tax policy.
“We don’t have anything against wealthy people,” Biden said Friday during a ceremony in the Rose Garden to celebrate passage of his $1.9 trillion spending plan, which included some changes to tax law.
“You got a great idea, you’re going to go out and make millions of dollars — that’s fine,” the president continued. “But guess what? You got to pay you fair share. You got to pay same. Because guess what? Folks who are making — living on the edge, they’re paying.”
With that sort of framing, Biden could outflank Republicans and come out on top in the upcoming debate.
Voters in recent years have shown more openness to the concept of raising taxes — at least as long as someone else is paying the tab. And Republicans reaped no benefits in the 2018 midterm elections after they worked with Trump to pass legislation that significantly reduced taxes over Democratic objections. That bill eliminated tax breaks popular with wealthier people and provided tax relief to middle-income earners.
Some Democrats are privately anxious about Biden’s tax plans, especially given the uncertain economic recovery from the coronavirus and the party’s thin House and Senate majorities.
Though philosophically supportive, Democratic strategists say the “how” when proceeding with tax hikes is as important as the “what.” The president, they say, should attach his proposal to something broadly popular — like infrastructure. Setting the income bar for tax increases high also matters so that most of the suburban voters that have been voting for congressional Democrats (and Biden) since 2018 don’t flee back to the GOP.
“We need to tread really lightly here,” a veteran Democratic operative said. “Taxes are part of our negative brand, if we belly up to that bar in the wrong way, it’ll cook us.”
