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Wealthy lobbyists have already cut 75% of Biden’s tax reform



Wealthy lobbyists have already cut 75% of Biden's tax reform

The Hill, a congressional newspaper, reports that business lobbyists are pleased they have toned down President Biden’s proposed tax hikes for corporations and wealthy individuals. A source identified as “a lobbyist with ties to Senate Democrats” told The Hill: “The business community has advanced with some Democrats on legitimate political concerns about some of these proposals and their economic and international competitiveness implications . “

What are these political concerns that have successfully swayed moderate Democrats? The article does not provide any information. We have the lobbyist’s assurance that they are “legitimate”. While this may be shocking, there is no actual requirement that lobbyists only raise legitimate political concerns. They are completely free to represent political concerns that are entirely selfish. In fact, this unsavory practice is known to occur from time to time.

Moreover, if business lobbyists made bad political arguments just because those arguments were beneficial to the people who pay them, they would likely not admit it in front of a newspaper. Instead, they would likely claim in public that their political causes are beneficial, even when in fact they are absolutely for sale.

I do not want to single out The Hill, a paper that has provided coverage of the Biden agenda that is in many ways superior to that in larger publications. Capitol Hill insider media, such as The Hill, have paid close attention to at least one major development that has received only passing attention in broader areas: Moderate Democrats have slashed President Biden’s progressive tax agenda.

Biden campaigned for a proposal to raise taxes for the rich by around $ 3.5 trillion over a decade. Nobody in Washington currently believes they will sign a tax hike of this magnitude. The current forecasts that are in circulation – Politico’s tax newsletter is a publication that used this estimate – put the total at about a trillion, give or take.

The most striking thing about moderate Democrats’ decision to cut Biden’s plan by about three-quarters is that we have no idea what the reasons are.

According to The Hill, lobbyists have argued that Biden’s plan would “slow the US recovery from the coronavirus recession”. It is not clear what basis they have for this conclusion. When mainstream economists believe Biden’s tax hikes would jeopardize the recovery, they are not saying so publicly. (As economists like Larry Summers did when they loudly warned Biden’s bailout plan would overheat the economy.)

When the conservative American Enterprise Institute released the figures for Biden’s full tax increase proposal, it found a negligible effect on economic growth: GDP decreased 0.16 percent in the next decade, GDP increased 0.19 percent in the following decade, and decreased by 0.18 percent in the longer term. All of these numbers are so tiny that they are rounding errors that equal zero.

One of the most “convincing” arguments, at least judging by the results, is the lobbying campaign to keep a notorious loophole called the “reinforced base” or, colloquially, “the angel of death gap”. Here’s how this loophole works: when you sell an asset like a stock, you usually pay tax on its profits. If you buy $ 1,000 worth of GM stock and sell it for $ 2,000, you will pay tax on the $ 1,000 capital gain. However, if you die and pass the property on to your heirs, any gains that occurred prior to your death will be erased from the books (hence “angels of death”). Your heirs only pay taxes on the profit made after the inheritance of the property.

This exemption enables half of all capital gains to avoid any taxation. The loophole is considered so ridiculous that conservatives often suggest eliminating it as an alternative to increasing inheritance tax. (Jeb Bush and Mitt Romney have both spoken out in favor of eliminating the Angel of Death loophole.) Biden proposes eliminating the loophole, with the exception of a generous $ 1 million exclusion. (Most capital gains belong to amazingly wealthy assets well over $ 1 million.)

Former Democratic Senator Heidi Heitkamp leads a lobbying campaign on behalf of wealthy benefactors to save the loopholes of the Angel of Death. With a straight face, Heitkamp tells The Hill that the loophole is vital to “protecting an emerging class of entrepreneurs within the Hispanic community and within the African American community. [who] cannot take advantage of these tax rules ”if it is eliminated.

Biden’s proposal provides protective measures for family businesses. This does not satisfy Heitkamp, ​​who argues (in the wording of The Hill) that “many Americans may think that wealthy and well-connected people will most likely benefit from exemptions.” And so, on behalf of Americans who are cynical of well-connected people who benefit from special exceptions, Heitkamp insists that we maintain a notorious loophole that benefits almost exclusively wealthy heirs.

Heitkampf is so committed to the fight against cynicism that she has refused to reveal the identity of the donors of her group. We can probably assume that these are mostly the die-hard black and Latin American small business owners she speaks of so movingly.

Instead of any well-articulated public justification, the moderate Democrats have instead put forward a transparently insincere pretext that their goal is to get the Infrastructure Act signed as quickly as possible. The ten Democrats in the House of Representatives, led by Josh Gottheimer, have insisted that their goal against the House of Representatives budget is to put shovels into the ground as quickly as possible. “No Labels”, the anti-partisan group financed by wealthy financiers, runs ads claiming that Gottheimer’s clique supports Biden’s agenda, emphasizes the infrastructure law, and makes absolutely no mention of the tax dispute. Many reporters have repeated Gottheimer’s portrayal of his motifs at face value.

On the other hand, The Hills’ less blinking report openly states: “Business interests have democratic allies in Sens. Joe Manchin (W.Va.) and Kyrsten Sinema (Ariz.) And the group of moderates of the House of Representatives led by Rep. Josh Gottheimer (NJ) – everyone has raised concerns about the size of the spending plan and potential tax increases. “

Since budget rules dictate that all ongoing costs be paid and Biden does not want to increase taxes for households with annual incomes less than $ 400,000, the size of his domestic political legacy is determined by how much new taxes he can get for the rich by Congress. His proposal is more than enough to finance a historical legacy. A handful of moderate Democrats are very, very quietly starving this legacy. If they had good reasons for their position, you would probably know what they are.

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