“Tax the rich!” they declare on the campaign trail and the social scene. But when it comes to legislating, Democrats show they don’t really mean it.
Most rich people are shielded from Democrats’ tax hikes. Even proud class-warrior Alexandria Ocasio-Cortez says the rich she wants to tax does not include the highest income earners. Yes, that’s just as silly as it sounds, but it’s true.
Also, the Democrats’ proposals this fall include tax hikes that only hit the poor and tax breaks that overwhelmingly help the rich. They are also leaving a loophole for millionaire fund managers, which they have long pretended to hate.
Let’s start with AOC’s definition of the rich.
.@AOC responds to criticism that “she’s rich.”
“They want you to think that when we talk about rich, we’re talking about doctor or a lawyer instead of someone with hundreds of millions of dollars if not billions of dollars.” pic.twitter.com/QvQA7TtJ6f
— John Gage (@johnrobertgage) September 15, 2021
Doctors and lawyers are not wealthy, AOC says, and neither is she. AOC makes $174,000 a year as a member of Congress. That puts her in the top 5% of all income earners in the United States. If she isn’t rich, then who is?
The median physician in the U.S. (presuming AOC didn’t mean Ph.D.s when she said “doctors”) makes more than $200,000. Somehow, doctors aren’t “the rich” that AOC wants to tax.
The median attorney makes a lowly $127,000.
If she doesn’t want to hike taxes on people earning $200,000, she doesn’t want to tax 97% of earners. She excludes most of the top 10% from her “tax the rich” rules. At what point do we call this out for the performative fakery that it is? Or is AOC really so ignorant that she thinks there are huge numbers of taxpayers out there with “millions of dollars if not billions of dollars?”
Meanwhile, there’s an aggressive push in the House to include a tax cut in Democrats’ tax-and-spending bill that would only apply to the rich. It is aggressively backed by Senate Majority Leader Chuck Schumer. They want to allow unlimited deduction of state and local taxes. Under current law, anyone can deduct up to $10,000 of state and local taxes on their federal taxes. Those deductions are moot for the vast majority of taxpayers, thanks to the large standard deduction. (This large standard deduction and the $10,000 cap on state and local tax deductions were both part of the Trump tax cut bill.)
The Democrats’ expanded deduction wouldn’t help anyone who itemizes their deductions — nearly all middle-class taxpayers — or anyone paying less than $10,000 in state and local taxes. Almost all of the benefits would go to the wealthy.
Democrats are also pushing a $12,500 tax credit for those buying electric vehicles. A married couple would have to earn at least $200,000 to owe that much in taxes. So basically, this is another tax break for wealthy lawyers and doctors who buy Teslas for their wives.
Finally, the Democrats have totally unsurprisingly decided to leave the “carried interest” loophole in place. This means that investment managers can continue to pretend their income is just investment gains so that they pay the lower capital gains rate instead of the higher income tax rate. Consistently, Democrats have railed against this loophole in public to shake donations out of scared fund managers and cast themselves as populists. But they are leaving the loophole in place.
That says a lot about the sincerity of their rallying cry to “tax the rich.”
