As the election approaches, the debate continues to heat up over whether Democratic presidential candidate Joe Biden’s tax proposals square up with his pledge not to raise taxes on households earning less than $400,000 per year. Rather than getting caught up in wonky debates over whether proposals like Biden’s itemized deduction cap violate his pledge, however, we should question why Biden made his tax pledge in the first place — and why proponents of tax hikes have increasingly sought revenue from an ever-narrowing segment of high-earning people.
The discussion over who will be impacted by Biden’s tax plan and who, if any taxpayer, should be paying more in taxes reveals a common but damaging, trend: An increasingly small number of taxpayers have been targeted to pay for a growing amount of proposed spending.
While broad tax increases remain politically unpopular, this trend highlights a growing disconnect between the shrinking tax base candidates rally for in their campaigns and the expansive spending proposals they promote.
We can see this divide by comparing the Biden pledge to previous presidential tax proposals. In 2004, Democratic presidential candidate Sen. John Kerry argued for raising taxes on people earning more than $200,000 a year while proposing about $2 trillion in additional spending.
Four years later, then-candidate Sen. Barack Obama campaigned on not raising taxes on households earning less than $250,000. Those earning more than $250,000 made up about the top 5% of income earners, which means 95% of earners would have been spared from tax hikes.
Similarly, in 2016, former Secretary of State Hillary Clinton proposed to hike taxes for only those earning more than $250,000. Clinton also proposed about $1.65 trillion in new spending, matched by about $1.5 trillion in tax increases.
This year, Joe Biden has gone further, reserving his promised tax hikes for those earning over $400,000 annually, or about the top 2% of income earners.
The trend is clear: Proposed tax increases are being pushed further up the income spectrum, disconnecting the vast majority of households from the tangible effects of tax increases.
But Biden’s tax pledge rhetoric is damaging because it takes this disconnect even further than past candidates. Biden has proposed about $8 trillion in new spending while only proposing about $3.8 trillion in tax increases over the next 10 years.
Absent additional tax increases on a small segment of the population, Biden would have to find a broader source of revenue to cover the additional spending he is proposing.
We can learn from other economically developed countries too. Scandinavian countries, for example, are well-known for their high levels of government spending and generous public services. Yet they fund these services with broad consumption taxes and social security contributions from people across the income spectrum, not by targeting higher earners to fund programs used by much of the population.
It is past time for policymakers to be honest about the trade-offs required to fund proposed public services sustainably. That requires transparency about how much additional revenue is needed to fund those services and recognition that a broad tax base is needed to ensure sustainable funding. This means ditching promises to only tax high earners and being direct about the trade-offs people must face to fund the services they desire.
While wiping away tax pledges like Biden’s would not be nearly enough to fix our political system, it would help clarify the trade-offs voters need to consider when they evaluate tax and spending proposals during political campaigns. It would improve the democratic deliberation needed in our fiscal policy today while leaving room for honest disagreement over the role of government in our society.
Garrett Watson is a Senior Policy Analyst at the Tax Foundation in Washington, where he researches and writes on federal tax policy.
