Whose Ox Is Going To Be Gored?-- Taxes
The idea of a literal ox goring someone was first brought up in the Old Testament (Exodus chapter 21:28-36) but the way the cliché "Whose ox is being gored?" is used today dates back to Martin Luther in his defense at the Holy Roman Empire's 1521 Diet of Worms. Luther, who "lost" the case, was condemned as a "notorious heretic" by Emperor Charles V. During the "trial," Luther said that "most human affairs come down to depending on whose ox is gored." In other words, a given event will be seen differently depending on the degree to which the viewer’s self-interest is involved. And when that "event" is taxation-- all hell breaks lose.
Biden's in an awkward situation. The Democrats have the narrowest of margins in both chambers of Congress and all you need is one dissenter in the Senate and 3 or 4 in the House and... all his plans could come crashing down. And when it comes to whose ox is being gored, Democratic Party unity is nearly nonexistent. First off, the Republican wing of the Democratic Party (Democraps)-- the Blue Dogs, New Dems, Problem Solvers, No Labels-- will do anything to protect their corporate campaign financiers, including working with the Republicans to thwart Biden's ambitious and crucial proposals of infrastructure, job creation, healthcare, etc.
Conservatives (of both parties) are insisting on cutting back the scope of everything Biden has proposed-- basically maintaining a status quo that is dismally failing-- and then paying for it through user fees and taxes on the working and middle class that leaves corporations and the ultra-wealthy "ungored." They hate the very concept of progressive taxation and embrace regressive taxes... but are wary of saying it aloud.
For those who want to keep track, the key villains-- aside from the Republican Party-- are, in the Senate, Joe Manchin, Kyrsten Sinema, Jon Tester, Angus King and the pairs of Democrats in Delaware, New Hampshire and Virginia, and, in the House, Josh Gottheimer (Blue Dog-NJ), Jared Golden (Blue Dog-ME), Abigail Spanberger (Blue Dog-VA), Lou Correa (Blue Dog-CA), Scott Peters (New Dem-CA)... to name a few.
This morning, writing for The Hill, Niall Stanage noted that the White House is fighting to flip the script on taxes, acknowledging "one of the fiercest divides in politics-- how much should the government do, and who should foot the bill?" Progressives and, seemingly and incongruously, Biden, are facing a fierce battle to get his infrastructure plan enacted not just from the obstructionist Republicans who want everything to fail but also from corrupt conservative Democrats seeking to protect their corporate and wealthy patrons. This week, the White House "will propose a massive boost to social infrastructure spending on things such as paid leave, childcare and tuition-free community college. To pay for it, according to multiple media reports, he will nudge up the highest rate of income tax and dramatically hike the capital gains tax paid by top earners. The plan is expected to call for an approximate doubling of the capital gains tax, from its current level of 20 percent, for Americans with incomes of over $1 million."
Americans with incomes of over a million dollars is very different from Americans who have scraped and saved and have a million dollars. What they are talking about is the few people who earn a million or more annually. Keep that in mind as you read further.
At the heart of the plan is a key question: whether income derived from the sale of assets should be treated basically the same as income in the form of a paycheck.
Biden and his backers answer with an emphatic yes. Wealthier Americans derive a greater proportion of their overall income from investment, they note. The beneficial treatment of capital gains, they say, has the effect of further helping those who are already in a privileged position-- and therefore exacerbating wealth inequality and social incohesion.
But there are counter-arguments, too. Those who favor keeping the capital gains tax low insist that it is a key driver of investment, and that high rates encourage people to hold onto their assets rather than incur a high tax bill, thus diluting economic dynamism.
Then there is the politics to consider. Democrats up until recently were petrified of being labeled the “tax-and-spend” party by conservatives-- a fear that was rooted in the knowledge of how effective such attacks had been in the 1980s and early 90s.
Given the razor-thin Democratic majorities on Capitol Hill, whether Biden can even get his proposals passed will depend upon his ability to corral [right-of-center corporate whores] such as Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ). Success is far from guaranteed.
Progressives are adamant that the time is right for Democrats to cast off their traditional timidity about taxation and push a more egalitarian agenda. Conservatives are equally emphatic that doing so would be a huge mistake.
“This is how you stall an economy,” said Grover Norquist, the president of Americans for Tax Reform and perhaps Washington’s best-known anti-tax campaigner.
Biden, Norquist insisted, “could just have sat back, because you are going to see this surge in the second quarter, there could be this incredible growth. You could be coasting on that but instead what you are doing is chasing investment away from the United States, telling people, ‘You don’t want to get capital gains in the U.S.’”
The Biden plan, Norquist argued, “is a boat-anchor on economic growth when going into 2022, you would want to be going gangbusters.”
Biden aides have been stressing how few people would be affected by the new top rate of capital gains tax. Jen Psaki, the White House press secretary, emphasized the $1 million income threshold for the top rate on Friday, and added: “The president’s bottom line is that people making under $400,000 a year should not, will not, have their taxes go up.”
Ron Klain, Biden’s chief of staff, tweeted that the plan was one Biden had “campaigned on extensively.” Klain added that it “changes the tax rate for less than 1% of Americans (in fact, less than 1/2 of 1% of Americans).”
...“If a 1 percent fall in stock prices is all that you get from a really major increase in capital gains taxes, that’s not a big problem,” Paul Krugman, the Nobel Prize-winning economist and liberal New York Times columnist, told Bloomberg TV.
More broadly, progressives are scathing of the predictions of doom from what they see as a basic move toward a more equitable tax structure.
Jonathan Tasini, a Democratic strategist who backed Bernie in the 2016 presidential race, argued that any assertion about the dangers of hiking the capital gains tax rate “is greed dressed up as economic argument.”
“There is no rich person in the world who will honestly tell you that he...would not have invested money in a company because of capital gains rates. You are making a profit already! What we are saying is, you have to give back.”
Tasini also argued that debates about taxation in general often proceeded along false lines-- as if the tax revenue simply disappears into the ether rather than being used for public benefit.
“Nobody who makes money, whether you become rich or less than that, does so entirely on their own or because of their own genius. All taxes are about giving back to pay for everything that society provides that allows you to make money and invest-- and that includes having the roads and bridges that take you to the office where you make a living.”
Mark Zandi, the chief economist of Moody’s Analytics, argued that the overall impact of Biden’s proposals was likely to be fairly modest, especially when the benefits of infrastructure spending are factored into the equation.
Taxpayers in the million-dollar-plus bracket are “a very rarefied group,” Zandi said.
If the Biden plan were to pass, he added, then maybe in a decade “an econometrician would be able to tease out some negative effects, all else being equal. But I think it is going to be very much on the margins. This is revenue that is going to presumably pay for the American Family Plan, which is childcare and family leave, and some of it is going to less wealthy households who are going to use it and spend it. It could help them go to work and so raise labor-force participation.”
Overall, Zandi predicted, the plan would be “a tailwind rather than a headwind” for economic activity.
The problem, in short, is that there even is a Republican wing of the Democratic Party, which, ironically, Senator Biden was once a part of. There is certainly no Democratic wing of the Republican Party. The GOP has a greed and avarice wing increasingly dependent on a hate and bigotry wing which has been rapidly morphing into a dominant fascist wing. How does the Democratic Party's internal disputes get so twisted by Republican arguments? Good question and that goes back to candidate recruitment, largely controlled by conservatives. In the House, the DCCC has been entirely controlled by violently anti-progressives since Rahm Emanuel consciously and vigorously set out to fill the congressional party with Blue Dogs and New Dems. This cycle's DCCC chair, Sean Patrick Maloney, a New Dem and 100% corporate shill, is already failing miserably and should be removed immediately-- this week-- and replaced with someone who knows what they're doing. The situation in the Senate is even worse, where Schumer-- who is never right on matters of recruitment-- insists only he picks Democratic candidates. His fatally-flawed conservative candidates almost always fail (like Cal Cunningham in North Carolina, Amy McGrath in Kentucky, Katie McGinty in Pennsylvania, Theresa Greenfield in Iowa and Patrick Murphy in Florida) and when one slips through-- the way Kyrsten Sinema did-- its just as disastrous for the Democrats.
This cycle, Schumer is already sticking his nose into races in states he's already failed in, literally trying to replicate nominations for more Republican-lite candidates in North Carolina, Kentucky, Florida, Iowa, Pennsylvania Wisconsin and Missouri. Watch has he sets about, behind the curtains, to eviscerate all progressives-- as he's doing right now to Pennsylvania front-runner John Fetterman.