Build Back Better Is a Gift to Rich Blue-State Democratic Voters

The SALT deduction might be the most expensive clue, but it’s not the only one.

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For the first five years, the single most expensive item in the House version of the Democrats’ Build Back Better, or “human infrastructure,” bill is a gigantic tax cut for millionaires and billionaires. This provision would lift the cap from $10,000 to $80,000 on income tax deductions for state and local taxes (commonly referred to among budget nerds as “SALT”).

Given how inconvenient this is for a party that for years has been campaigning against millionaires and billionaires, some Democrats prefer the claim that it’s merely the second-most-costly provision. They do this by merging the childcare and pre-K programs into a single item.

But no matter how you slice it, giving a huge tax cut to the super-rich is a weird thing to do when you’ve been claiming that the solution to our problems is simply getting the rich to “pay their fair share.” It’s even weirder when you consider that this tax break would be even bigger and more regressive than former President Trump’s tax “giveaway” that was so reviled by progressives—which the House version would keep. Benefits from the Democrats’ regressive giveaway would largely go to taxpayers in the top 20 percent of the income scale and would overwhelmingly benefit the top 0.1 percent of earners, specifically in high-tax states like New York, New Jersey, Illinois, and California.

Obviously, this is all justly ripe for accusations of hypocrisy. But what explains the hypocrisy? I can see three mutually reinforcing reasons.

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  1. Avatar photo
    Ben Connelly

    One might say that the Democrats’ proposal needed a bit more seasoning to make it palatable to their constituents…

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  2. Avatar photo
    Troy Ault

    SALT is a tough topic for a conservative. For “starve the beast” and subsidiarity arguments, one should in theory be in favor of a higher deduction. “Pay for the gov’t you voted for” arguments are fair but I think this all amounts to a need to reset or rationalize the relative tax burden between state & federal governments. As a CA resident, I’d like to see our SALT much lower, not least because I fail to see any return on the investment when the police don’t come and homelessness is so endemic. I think a more sensible approach would be to implement the lower SALT deduction over time to let local politics in a state like CA marinate over the impending higher burden and the question of whether to lower SALT in response. You could also allow deductions for redundant services between state & federal, but not for, say, the defense budget.

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  3. Grafakos

    "Benefits from the Democrats’ regressive giveaway would largely go to taxpayers in the top 20 percent of the income scale and would overwhelmingly benefit the top 0.1 percent of earners"

    How do you figure that a tax deduction with an $80k cap would overwhelmingly benefit the top 0.1 of earners? For them, $80k is down in the noise. But it will make a huge difference for those of us mere mortal non-billionaires in the top 20% range in high-tax states, where property tax alone is easily more than the current $10k cap.

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    rlritt

    You don't think this is a bone to sell it to the Republicans?

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  5. CatoTheElder

    The significant bump back up of SALT deductions is but one of several relatively simple reasons one might see as motive to object to BBB. Another: The proposed increase in federal money pointed at child care/Pre-K “education” is more or less like letting the camel’s entire head and neck under the tent flap—we’ll end up sharing the tent with the camel, and sooner rather than later. Is that a good thing? Well, if you think the feds running child care throughout the nation is a good thing, then, sure. I’m not persuaded that it won’t be a form of putting (especially low-income and at-risk) kids in soft, pastel-painted, but ultimately poorly run, understaffed, and bady designed government “camps”. One can write the rest of that story, cribbing from others who’ve warned about the state’s “loving” death-grip.

    Dems like to say that opening the government’s money-spewing hydrants will give states and localities “the freedom” to do for their people what needs doing—but they don’t talk much about the strings attached. Do parents really want their kids in child care settings where “teaching” and the like are in effect to be directed by the federal government?

    The elephantine challenge to this resides in the disunity and polarization of culture, politics, and more. The left—especially the more “progressive” factions thereof—seem to have no philosophical problem in the slightest with deciding what it is that everyone should know, believe, comport with, approve of, and more. That’s why they call it “woke”—when one awakens and sees the world, then one takes the obvious (to them) actions to make the world like it’s “supposed to be”. The much bigger problem is simple: not everyone agrees about what the world is “supposed to be”—and there’s precious little civil discussion about the matter. When it comes to “values” and the like, to the extent that values and culture determine policy, it becomes an “our way or the highway” ultimatum at best.

    Build Back Better? Building back implies restoration. What needs restoring? And restoration done “better”? What things were wrong with the original and thus need replacement or improvement? When the local HOA imposes its heavy hands in favor of “maintaining the feel of the neighborhood”, it’s really talking about property values and control over all too many of the details of what one’s home will look like, etc. It’s frankly rather ludicrous that the neighborhood that began as burgeoning spread of small ranch homes is managed now so as to cultivate a burgeoning crop of “McMansions” and the like, with the guilty parties still straight-facedly claiming they’re “preserving” the intentions of the original developers and the “feel” of the neighborhood.

    The same is true, all too often, of things like the BBB—and this case is no exception. Does the federal government need to spend money to stimulate the economy? When inflation is no longer being described by Fed chair Powell as “transitory”? If better child care is needed, is that something best done by federal diktat?

    The BBB is no more—and no less—than an attempt by the “progressives” of the political left to shape and guide the nation toward their objectives. Some of their ideas have good labels, others…not so much. How much real discussion is being held on the matter? Well, at least in public view, not much. And what there is, is too often obscured by the cacophony of protests, mud-slinging, name-calling, and the hyper-everything world of social media outbursts.

    Time to stand athwart history, yelling “Stop!” Which, as the vessel becomes ever larger and more unwieldy, and the crew and passengers more bellicose and obstreperous, becomes something like yelling into a riot. But one does what one can, I suppose.

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  6. Anna A

    The reply buttons are not working for me today, but Scarlett raised a good point, that the net contributor states are mostly Democrat. I think 8 of the 10 states that are most dependent on federal aid are republican. Kind of ironic, if you ask me.

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  7. Anna A

    I'm not following how having more than $10K in local and state taxes is somehow exclusive to millionaires, or how child care subsidies mainly benefit blue states.

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  8. N T

    I'm confused about the facts here...I'm in no way rich. I own a "home" in NJ. I pay 14k a year in local taxes and nearly 20k a year in interest on a 900 sqr foot condo. The 80 yr old lady down the street has owned her place for years, her taxes are worse. We are both capped at 10k. It is forcing her to sell and costing me a small fortune in extra taxes. I make about the median income. Far --- FFAAARRRR --- from being a millionaire or anything close. I'm a working stiff.

    I think your framing of this is strange...maybe the cap should be 25k or something, I'd buy that position. But I think you are framing this in a way that doesnt seem to take in the full cost to normal non-millionaire people.

    It is schools, I'm stunned how much we spend on them with such poor outcomes. Kids would be better just working on farms vs. the psychological impact of constant live fire drills and cops watching them like schools are prisons.

    But you are right in regard to the idea that this welfare, and lets be honest tax policy is welfare policy, is enabling bad taxation policy. I'm one of those people that left NJ and NY and am STUNNED at how low my taxes are and yet things seem to run even better. I left because the pressure the removal of SALT put on my wallet.

    As for the childcare, in NYC lots of religious institutions provide these services. So not sure you are being truthful about the outcomes there. There was a recent supreme court ruling on the PA adoption situation that also points to your contention here being hyperbole.

    Wait for the new electric male enhancing drugs, I mean pickup trucks, to come out, you'll be recanting the position on cars soon enough. That F Lightning (I think that is what it is called) can back power your home...that's pretty damn cool and useful in rural areas.

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    1. Avatar photo
      Pat Riot

      Yep, those Republicans think everybody* is "rich" when they say "tax the rich"....

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  9. Michael.Mcchesney

    One other thing about the electric car tax credits, Tesla buyers are excluded from the full tax credits because Tesla isn't unionized. Japanese cars companies' electric cars are also ineligible for the full credits because of parts manufactured outside the U.S. and lack of unions.

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    Scarlette Tarte

    Oooh, surprise,surprise...Dems voted for Democratic policies.

    In other words, "the Democratic government model".

    Yep. We want it. And since blue states carry those red states, who can give their people services that their citizens don't pay for, because republicans, who don't believe in taxes, still know they better be able to provide at least some services...like public schools and rural hospitals...lest they lose every election when people figure out the con, those blue states deserve the SALT deduction.

    Red states...you want to take away SALT? Then tax your citizens properly. And blue states will keep their money in their own states, and won't need the SALT deduction.

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