Democrats Say “Tax The Rich,” But Their Plan May Fall Short

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Alexandria Ocasio-Cortez wearing a dress with the slogan “Tax the rich”.

Washington, United States:

A proposal making its way to Congress and even gracing the gown of one of its most prominent lawmakers, “tax the rich” has become a rallying cry for Democrats as they seek to remake the social safety net of Canadians. United States.

It was broadcast widely on Monday when Alexandria Ocasio-Cortez, a representative for the Democratic House who often speaks out against the country’s economic inequalities, wore a dress bearing the slogan written in capital letters in scarlet at the Met Gala in New York.

“The time is now for child care, health care and climate action for all. Tax the rich,” Ocasio-Cortez wrote on Instagram with a photo of the off-the-shoulder white dress she said he borrowed.

Lawmakers should support a plan backed by President Joe Biden to spend $ 3.5 trillion over 10 years, which would expand a host of social services by raising taxes for wealthy Americans and businesses.

But experts argue that while some wealthy people may see their taxes rise, the wealthier will suffer less of an impact than advertised because the bill does not levy taxes on increasing the value of assets such as real estate and stocks.

“It depends on how you define the rich. The bill certainly increases taxes on the very top earners and does so in different ways,” Corey Husak, head of government relations at the Washington Center for Equitable, told AFP. Growth.

“The bill taxes multimillionaires and people who are just rich, far more than it will affect people who are outrageously rich.”

Some of the proposed tax changes represent “a real but modest increase in the rate escalation of the US tax code,” said Samuel Hammond, director of poverty and welfare policy at the Niskanen Center.

But by wearing her motto dress to an event where tickets are $ 35 and tables are up to $ 300,000, New York area representative Ocasio-Cortez, “has done the wealthy a big favor, a little bit. like when an Oscar winner uses his award speech to chastise Hollywood.

“It makes a wealthy audience feel progressive without any real cost,” Hammond said.

– Narrow path –

Dubbed “Build Back Better”, Biden’s plan aims to “transform” American society by instituting a universal preschool, reducing childcare costs, improving access to health care, increasing investments in social housing, legalizing millions of migrant workers and expanding measures to combat climate change.

Republicans say they won’t support it, and Democrats intend to pass it with their votes alone – a difficult task given they only control both the House and Senate by very wide margins. thin.

Aiming to generate nearly $ 3 trillion in new income, a plan released by the Democratic leadership of the House Ways and Means Tax Drafting Committee would see tax rates on top U.S. incomes drop from 37% to 39, 6%.

The rate of the most profitable companies would drop from 21% to 26.5%.

However, centrist Democratic Senator Joe Manchin, who has called for slowing negotiations on the plan and will not support a bill as big as the one proposed, prefers a 25% lower tax rate.

And the plan might not generate as much revenue as Democrats think: The Congressional Non-Partisan Joint Committee on Taxation released an estimate saying it would bring in around $ 2.1 trillion over 10 years.

– ‘Sweat from their forehead’ –

Husak said the bill’s provisions, such as a three percent surtax on people earning more than $ 5 million a year, would indeed raise taxes for the rich.

But the plan does not tax increases in the value of assets held by the wealthiest Americans, nor does it close a loophole that allows their heirs to not pay capital gains tax when they do. inherit.

“When you talk about billionaires, they’re not creating wealth by the sweat of their brow, so to speak. They get it because they have large capital assets that are growing in value,” Husak said.

The Senate must also support the plan, and after the stock market surge during the Covid-19 pandemic, the finance committee chief objected to billionaires not paying taxes on their earnings. investment.

“I am convinced that every year the billionaires who have done extraordinarily well during the pandemic should pay their taxes,” Senator Ron Wyden said Tuesday.

Dubbed “Build Back Better”, Biden’s plan aims to “transform” American society by instituting a universal preschool, reducing childcare costs, improving access to health care, increasing investments in social housing, legalizing millions of migrant workers and expanding measures to combat climate change.

Republicans say they won’t support it, and Democrats intend to pass it with their votes alone – a difficult task given they only control both the House and Senate by very wide margins. thin.

Aiming to generate nearly $ 3 trillion in new income, a plan released by the Democratic leadership of the House Ways and Means Tax Drafting Committee would see tax rates on top U.S. incomes drop from 37% to 39, 6%.

The rate of the most profitable companies would drop from 21% to 26.5%.

However, centrist Democratic Senator Joe Manchin, who has called for slowing negotiations on the plan and will not support a bill as big as the one proposed, prefers a 25% lower tax rate.

And the plan might not generate as much revenue as Democrats think: The Congressional Non-Partisan Joint Committee on Taxation released an estimate that said it would bring in around $ 2.1 trillion over 10 years.

– ‘Sweat from their forehead’ –

Husak said the bill’s provisions, such as a three percent surtax on people earning more than $ 5 million a year, would indeed raise taxes for the rich.

But the plan does not tax increases in the value of assets held by the wealthiest Americans, nor does it close a loophole that allows their heirs to not pay capital gains tax when they do. inherit.

“When you talk about billionaires, they’re not creating wealth by the sweat of their brow, so to speak. They get it because they have significant capital assets that are growing in value,” Husak said.

The Senate must also support the plan, and after the stock market surge during the Covid-19 pandemic, the finance committee chief objected to billionaires not paying taxes on their earnings. investment.

“I am convinced that every year the billionaires who have done extraordinarily well during the pandemic should pay their taxes,” Senator Ron Wyden said Tuesday.

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