$285 billion tax cut for the rich is now 2nd most expensive piece of Build Back Better

by JAKE JOHNSON

Speaker of the House Nancy Pelosi (D-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.) talk to reporters on June 23, 2021 in Washington, D.C. PHOTO/Samuel Corum/Getty Images

“The whole initiative seems deliberately sculpted to hand the American right a weapon to bludgeon Democrats ahead of the election.”

A $285 billion tax cut that would predominantly flow to rich households is now the second most expensive component of the Build Back Better Act after corporate Democrats succeeded in slashing funding for a number of key progressive priorities—and removing other programs entirely.

“At a time of massive income inequality, we must increase taxes on the 1%, not give them huge tax breaks.”

With the House of Representatives preparing to vote later this week on the roughly $1.8 trillion reconciliation package, the Washington Post reported Tuesday that Democrats’ plan to raise the cap on state and local tax (SALT) deductions from $10,000 to $80,000 through 2026 would be “more costly than establishing a paid family and medical leave program, and nearly twice as expensive as funding home-medical services for the elderly and disabled.”

“Over the next five years, raising the SALT cap would provide a tax cut only to those who itemize their taxes and pay more than $10,000 in state and local taxes—a group overwhelmingly made up of the wealthy,” the Post noted. “A recent analysis from the Tax Policy Center says the tax cut will benefit primarily the top 10% of income earners, with almost nothing flowing to middle- and lower-income families.”

The only part of the Build Back Better package that’s currently larger than the proposed SALT cap increase is the legislation’s universal pre-K and affordable child care programs, both of which progressive critics warn are deeply flawed and have been pared back in recent weeks to appease right-wing Democrats.

“As the Build Back Better bill makes its way through Congress, significant changes are being made to the various proposals, generally for the worse,” Matt Bruenig of the People’s Policy Project noted last week. “Hollowed-out versions of older proposals are limping to the finish line and it’s a completely different bill at this point.”

The proposal to lift the SALT cap—which was created by the GOP’s 2017 tax law—was added to the reconciliation package largely at the behest of a small group of corporate Democrats who threatened to tank any bill that omitted an increase.

“No SALT, no deal,” Rep. Tom Suozzi (D-N.Y.) said in a recent statement, a message that other right-wing Democrats readily echoed.

Last month, after President Joe Biden privately floated leaving SALT changes out of the reconciliation package, Senate Majority Leader Chuck Schumer (D-N.Y.) reportedly intervened to rescue the tax break, which one analysis estimates will deliver an average tax cut of $16,760 to U.S. millionaires.

Outraged by the SALT proposal’s regressivity, Sen. Bernie Sanders (I-Vt.) told reporters on Tuesday that he’s currently working on a compromise plan that would limit the provision’s benefits for the wealthy.

“I am working with some of my colleagues to make sure that we come up with a proposal that protects the middle class, but does not end up with an overall reconciliation bill in which millionaires are better off tax-wise than they were under [former President Donald] Trump,” said Sanders, the chair of the Senate Budget Committee.

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