Maine’s Idea: The Tax Code Should Work For Ordinary Americans

Jared Golden has made himself very visible in Washington by being the only House Democrat to vote against the $ 1.75 trillion “Build Back Better” bill that has now gone to the Senate after the passage of the $ 1.2 trillion bipartisan infrastructure measure President Biden signed into law on November 15.

The Maine 2nd District congressman is therefore the only Democrat to vote against the BBB and the US bailout – another measure reserved for Democrats – signed by Biden on March 11.

In both cases, Golden complained that the bills were too expensive, but his main objection to BBB is that it reinstates the deduction for state and local taxes removed by the 2017 Trump tax cut.

The objection seems peculiar; tax breaks rarely arouse passions among Democrats or Republicans alike. Tax policy is largely ignored by the public and the press alike, although it can deeply affect our lives, much more than the “culture wars” sown to distract us.

Golden claims that allowing full deductions for state and local taxes is a giveaway for the rich, saying, “If we can’t raise taxes for millionaires and billionaires, then these programs that are important to the people of the country. working class will not be viable in the future. “

It is dishonest. All progressive federal income tax deductions and credits tend to benefit higher income earners. Since they make the most money, they pay the most taxes – and they should.

What Golden fails to point out is why Democrats are trying to reinstate deductions, repealed as one of the many insidious features of the 2017 tax cut.

The deduction essentially encourages states to use their own progressive income taxes to increase their income, rather than the sales, excise, and property taxes that bear the greatest burden on low-income taxpayers.

Several large “blue states,” including California, Illinois and New York, have done just that to make up for persistent gaps in federal support for national programs, from housing assistance to land conservation.

Seeing the trend, the Republican tax experts who drafted the Trump bill decided to reduce the deduction, creating a “double taxation” on income that was so abhorrent to the GOP when applied to corporations.

In essence, states are now penalized for taxing the rich, in an attempt to make state taxes even more regressive. Maine is one of the states whose residents – constantly fleeing to low-tax Florida, we’re told – benefit from the deduction.

It is now even more difficult to interest lawmakers in restoring Maine’s original, 1969 version of the progressive income tax, since then cropped.

But there is more. In 2017, the GOP decided to eliminate the personal exemption and incorporate it into an expanded standard deduction of $ 24,000.

This is hardly likely to arouse the wrath of the ordinary taxpayer; that seems reasonable. But there are two perverse effects.

Working families with children, who enjoyed additional personal exemptions, lost them. More importantly, most middle-class taxpayers have lost any incentive to donate to charity because the new standard deduction has eliminated their need to itemize.

For the typical homeowner couple, the combined mortgage interest, charitable contributions – and state and local tax exemptions – meant they were itemized and could deduct additional freebies.

As it is, the rich get full deductions for donating money to their own foundations, while the incentive for charitable deductions is gone for anyone. This can hardly be what Representative Golden means about “protecting working families”.

And if we’re really interested in “raising taxes on millionaires and billionaires,” as Golden suggests, there was a lot more to the original Biden bill. Golden has notably remained silent as provisions to restore previous corporate and personal rates were struck in the Senate, at the behest of two “moderates.”

We will have to do a lot more to tax the rich, not less. It will simply not be possible to manage the huge public investment needed to ‘decarbonize’ the economy and avoid catastrophic global warming without much more tax revenue, and it cannot come from people who live on paychecks; in terms of income, this society is painfully unequal.

The scuttling of the national and local deduction was just one part of an utterly bad tax bill the Republicans threw on the country. This is why Trump’s bill remains hugely unpopular among voters, while BBB is equally popular, even among Republican voters – but not GOP lawmakers.

Golden’s stance is very selective and suggests that no amendment that could pass the milestone would have pleased him. If he consulted his fellow citizens before deciding how to vote, it would be interesting to hear the results.

There is a lot of work to be done to bring the tax code back closer to something that works for the average American and the average Mainer. Even if BBB becomes law, the fight has only just begun.

Douglas Rooks, editor, commentator and journalist from Maine since 1984, is the author of three books. His first, “Statesman: George Mitchell and the Art of the Possible”, is now available in paperback. He welcomes comments to[email protected]

” Previous

Following ”

Source link

Comments are closed.