The Democrats are the Party of the Rich. They were swept into the House majority by a revolt of the elites. This party of Orange County, Westchester County, and Chicago’s North Shore is playing the part, wasting no time pushing policies to hand special tax breaks to their upper-middle-class constituents.
Consider Rep. Nita Lowey, D-N.Y. As the chairwoman of the Appropriations Committee, former chairwoman of the Democratic Congressional Campaign Committee, and in the top 10 in seniority among Democrats, Lowey is among the most powerful members of Congress.
She has introduced two bills so far. One is the appropriations measure to reopen the government. The other is a major tax cut for the rich.
Lowey’s bill would undo exactly one part of the Tax Cuts and Jobs Act: the limit on deductibility of state and local taxes, including property taxes. The law capped the state and local tax deduction, or SALT deduction, at $10,000.
That cap doesn’t affect most tax filers. If you claim the standard deduction, as most taxpayers do, you don’t benefit from the SALT deduction. Since tax reform nearly doubled the standard deduction, about 88 percent of all taxpayers will not itemize. If your state and local taxes are at or below $10,000 per year, you also aren’t affected by the cap.
The cap on the SALT deduction mostly cut into the tax breaks of high earners in high-tax places.
“In 2016,” the Tax Foundation noted recently, “77 percent of the benefit of the SALT deduction accrued to those with incomes above $100,000; only 6.6 percent went to taxpayers with incomes below $50,000.”
But these high earners in high-tax places are the Democratic base.
Lowey’s district, for instance, has a median income of $96,000 and income tax rates that get as high as 8.82 percent. Throw on the astronomical property taxes in those New York City suburbs, and you can see why Lowey is big on maximizing this tax break for the wealthy.
The Democrats wouldn’t have taken over the House without its pickups in wealthy and high-tax districts. The ten states with the highest state and local taxes as a percentage of income accounted for 15 Democratic pickups (notably California, New York, New Jersey, and Minnesota). Throw in the Democratic flips in very wealthy suburban districts in Illinois and Virginia, and you realize the Democrats owe their majority to folks who have benefited the most from this tax break for the rich.
The 10 wealthiest congressional districts all elected Democrats to Congress last year, so it’s fitting this new majority would push a tax break that almost entirely goes to six-figure earners.
Let the bomb-throwing millennial women from the Bronx get the media love, but never forget that the beating heart of this House majority, under the leadership of the gentlelady from San Francisco and the guidance of the gentlelady from Westchester, are the wealthy suburbanites who want their full tax break back.
