Taxes

How The White House Will Sell Higher Taxes

SK Ashby
Written by SK Ashby

The Biden administration and congressional Democrats are in early discussions about a large infrastructure spending bill and while we don't know exactly how large it will be, we know it will be funded by raising taxes on the rich.

Now, I don't necessarily believe the White House will face an immensely difficult task in selling the tax and spending package, but there should be no doubt that the Republican party and elements of our political press will try to hold the White House to standards they never hold themselves to.

To that end, Bloomberg reports that the White House will focus their attention on the enormous gains made by rich shareholders during the coronavirus pandemic.

The so-called K-shaped recovery, in which wealthier Americans thrived even as low-income and many middle-class workers suffered from job losses, evictions, food insecurity and health risks associated with working in-person jobs during Covid-19, has reinforced the administration’s intentions.

The richest 1% of U.S. households added more than $4 trillion in wealth last year as stocks hit record highs and property values swelled, fueled in part by record-low interest rates. The bottom 50% saw their net worth gain by a much-smaller $470 billion -- and that was bolstered by the extraordinary income support provided in the March 2020 Cares Act.

The people who benefited the most from Trump's tax cuts passed by Republicans in 2017 were already the richest people in the world. Those tax cuts primarily benefited executives and other rich shareholders who got even richer because of the coronavirus pandemic. They will still be the richest people in the world even if they lose those tax cuts and pay more through other means.

It seems fairly clear that the White House strategy for selling this "Build Back Better" plan will focus on low income, working class, and middle class voters. Democrats will be forced to use reconciliation if they're ever going to pass this package and Republicans are going to cry blood murder about higher taxes. The core constituencies of the Democratic party need to know their taxes will go down and their communities will see immediate benefits.

Centrist Senators Joe Manchin and Kyrsten Sinema need to be convinced more than any Republican does because they are the ones who will make reconciliation possible. Manchin himself floated some of the tax-raising proposals being strategically leaked from the White House so it may come down to Sinema more than him.