Republicans Vs Democrats On Taxes: An Overview
We often boil down the tax policy of our major political parties to its simplest form: Democrats raise taxes to fund social programs, and Republicans lower taxes to benefit big businesses and the wealthy.;Both ideas oversimplify the policy of each party, yet both ideas are essentially true.
Whether you agree with more government spending or tax breaks for corporations, each party’s agenda will affect your taxes.
Which Party Is The Party Of The 1 Percent
First, both parties receive substantial support. Much of it comes from registered voters who make $100K+ annually. However, Democrats actually come out ahead when it comes to fundraising for campaigns. In many cases, Democrats have been able to raise twice as much in private political contributions. But what about outside of politicians? Does that mean Democrats are the wealthier party? Which American families are wealthier? Republicans or Democrats?
Honestly, it is probably Republicans. When it comes down to it, the richest families in America tend to donate to Republican candidates. Forbes reported out of the 50 richest families in the United States, 28 donate to Republican candidates. Another seven donate to Democrats. Additionally, 15 of the richest families in the U.S. donate to both parties.
Republicans Are Setting A Tax Trap For Biden
Republicans in Congress want to raise the federal gas tax. Yes, the same Republicans who oppose tax hikes most of the rest of the time.
You wont hear them say, lets raise the gas tax, exactly. Theres a code phrase: user fees. Senate Minority Leader Mitch McConnell, for instance, says Republicans will support $600 billion in infrastructure spending, as long as user fees cover the cost. Were happy to look for traditional infrastructure pay-fors, which means the users participate, McConnell said in Louisville on May 3.
The conventional wisdom on infrastructure is that its one rare area of bipartisan agreement, since everybody wants better transportation and a more efficient economy. But theres not really bipartisanship, because of the clash over how to pay for it. Its like a husband and wife saying they agree on the importance of money, except he wants to spend it while she wants to save it.
You May Like: Republicans Are Stupid Donald Trump Quote
The Salt Cap Has Yet To Be Addressed
Democrats from high-tax cities and states have agitated for months to address a limit on how much taxpayers can deduct in state and local taxes, after the 2017 Republican tax changes imposed a cap of $10,000 for single filers and $20,000 for married couples filing jointly.
None of the tax proposals so far have formally addressed a partial or full repeal of that limit, although it has support in both chambers and Senator Bernie Sanders, the Vermont independent in charge of the Budget Committee, has signaled openness to a partial repeal of the cap.
And while it was left out of the legislation released on Monday, Mr. Neal and two Democratic advocates for the proposal, Representatives Bill Pascrell of New Jersey and Tom Suozzi of New York, issued a statement pledging that we are committed to enacting a law that will include meaningful SALT relief that is so essential to our middle-class communities.
Mr. Suozzi, who has stood behind a mantra of No SALT, no deal, issued his own statement expressing confidence that a change to the limit would ultimately be included in the package. Some liberal Democrats, however, have pushed back against its inclusion because of its cost and because it could counter some of their tax increases on the wealthy.
What The House Democrats Are Proposing
The 10-year spending plan is the latest step in Democrats campaign to expand education, health care and child care support, tackle the climate crisis, and make further investments in infrastructure.
Party leaders are hoping to use the annual budget process to push forward several measures in Bidens jobs and families proposals that have been blocked by the Republican opposition.
It includes a number of provisions to combat climate change and to invest in infrastructure and jobs.
This story has been updated with additional information.
Don’t Miss: Republican Shutdown
‘we’re The Party Of Lower Taxes’
Sen. John Cornyn, R-Texas, said he “would not be surprised” if Republicans move to undo Biden’s tax hikes the next time they control Washington.
“They’re the party of big government. We’re the party of lower taxes and more freedom,” he said. “That’s kind of the problem with doing business this way on a purely partisan basis.”
Sen. Jerry Moran, R-Kan., who is up for re-election next year, said avoiding sharp swings in policy is “a reason not to” govern on a party-line basis.
“We ought to avoid the ups and downs, the uncertainty that comes with a change after every election,” he said.
Senate Finance Committee Chair Ron Wyden, D-Ore., said it’s “absolutely crucial” for Democrats to emphasize the need for economic investments to voters and to make the case for tax “fairness” on top earners to set up a safety net that can stand the test of time.
“I say this to everyone: If you’re a nurse in Medford, Oregon, treating Covid patients, you pay taxes with every single paycheck no tax havens for you. If you’re somebody who’s a well-connected billionaire, it’s very different. It’s to a great extent optional,” he said. “People have never heard that. They say that’s not right. Everybody should have to pay their fair share.”
Rep. Brendan Boyle, D-Pa., said Democrats should ignore GOP warnings about taxes, arguing that they would seek to cut social programs and lower taxes on the wealthy no matter what Biden does.
The Income Tax Arrives
19011902190419061907 1908 190919101913A hand from Washington will be stretched out and placed upon every mans business; the eye of the Federal inspector will be in every mans counting house . . . The law will of necessity have inquisitorial features, it will provide penalties, it will create complicated machinery. Under it men will be hailed into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the tax payer. An army of Federal inspectors, spies and detectives will descend upon the state . . . Who of us who have had knowledge of the doings of the Federal officials in the Internal Revenue service can be blind to what will follow? I do not hesitate to say that the adoption of this amendment will be such a surrender to imperialism that has not been since the Northern states in their blindness forced the fourteenth and fifteenth amendments upon the entire sisterhood of the Commonwealth.1914-19151916 19171918-1919Audio clip: McAdoo on the need for tax reduction, probably 1919.1920 Audio clip: George White, on Republican tax promises 1921 Andrew Mellon19241926against 19281929-1932whether
Of The Founder Of The South Korean Megachurch Died At The Age Of
The draft proposal, which may still change before it is officially released on Monday, calls for raising the top marginal rate on individuals to 39.6%, up from the 37% rate set by Republicans 2017 tax cut law. . Plans aired Sunday and obtained by CNN.
This rate will apply to individuals whose taxable income exceeds $400,000 per year and married couples who jointly earn more than $450,000 annually.
The top capital gains rate will increase from 20% to 25%.
In addition, lawmakers would impose an additional 3% tax on individuals with an adjusted gross income of more than $5 million.
And it would broaden the net investment income tax to cover net income received in the ordinary course of a business or business for single taxpayers, joint filers with more than $400,000 in taxable income, or joint filers with more than $500,000 in income.
Currently, as part of the Affordable Care Act, some high-income Americans are subject to an additional 3.8% Medicare tax on certain investment income and a 0.9% Medicare surcharge on wages.
The proposal also calls for raising the top corporate tax rate to 26.5%, up from the current 21% set by Republicans 2017 tax cut legislation. This would only apply to businesses with incomes in excess of $5 million.
And the House resolution would increase the minimum tax on foreign income of US companies to 16.5 percent from the current 10.5%. Biden had suggested increasing it to 21%.
The Biden Tax Proposal Is Still In Its Early Days
Bidens follow-up recovery plan is still taking shape, as are plans to accompany it with taxes. The White House wants to be deliberate in how it goes forward not just in addressing the immediate issues, but also in making strategic decisions about whats on the horizon.
What Bidens trying to do is to make some long-term structural changes for this economy and the investments that we need to be competitive with China and to really bet on American workers and to pay for some of that, Bianchi said.
But there are obstacles. For one thing, the US economy is hardly firing on all cylinders: The US economy is still hamstrung by the Covid-19 pandemic, and millions of jobs still arent back. There is increasing optimism that between the stimulus package and vaccines, the economy is about to bounce back fast, but that doesnt make the politics of the issue a walk in the park.
Were still in the midst of a recession, and it would be pretty easy to make the argument that this isnt a great time to be talking about tax increases, said Leonard Burman, co-founder of the Tax Policy Center and a Syracuse University economist. If the economy comes roaring back, then it would be the appropriate time to be talking about tax increases.
Policymakers could have some levers here perhaps phasing in tax increases, or making sure theyre not put in place until unemployment hits a certain level but its still a tricky situation. After all, 2022 is an election year.
Read Also: Why Did Republicans Lose The Election
Hearings This Week Could Also Expose Divisions Within Party
Top Democrats argue voters would prefer tax increases on a small group of wealthy individuals and corporations to pay for infrastructure spending over broad-based user fees that would take a bigger chunk out of lower-income voters wallets.
Thats despite Senate Republicans putting transportation fees on the table as well as new taxes on electric vehicle drivers who dont currently pay into the Highway Trust Fund.;But President Joe Biden pledged not to raise taxes on anyone making less than $400,000, and Democratic leaders are anxious to protect vulnerable members facing tough midterm challenges.
Rep. Ron Kind, D-Wis., said his constituents werent troubled by Bidens proposals to raise taxes on the top 1 percent of households and corporations, which would be an easier sell than increasing gasoline or other user fees.
If the feedback back home is any indication, it sure is, said Kind, a member of Democrats Frontline program for top House GOP targets. He won reelection last year by the closest margin of his career in a district Donald Trump carried twice.
A Morning Consult poll conducted April 21-25 supports Kinds assessment. The survey found that 51 percent support raising the corporate tax rate to 28 percent, versus 31 percent support for a gas tax increase and 29 percent for a vehicle-miles-traveled tax to finance infrastructure.
Stock Market Performance Under A Democratic Or Republican President
Updated: by Financial Samurai
Let us take a look at the historical stock market performance under a Democratic or a Republican President. The annualized S&P 500 return by President is quit consistent over history.
Before finding out the answer, Id like you to guess under what party do you think the S&P 500 has performed the best? From there, we can compare the reality with your beliefs.
After all, one of the keys to being a good stock investor is to remove as much bias from your investing process as possible. It is suboptimal to invest on emotion.
For example, I know several people who decided to sell a majority of their stock holdings in 2016 once Donald Trump won the election. They hated Donald Trump. As a result, they missed out on over 50% in S&P 500 gains.
You May Like: How Many Seats Did The Republicans Win In Senate
Republicans To Increase Taxes For More Than 5 Million Older Americans
Republicans are trying to force a vote on their tax bill before people know whats in it, because they know how unpopular their proposals are. But what we already know is damaging enough, including that more than 5 million older Americans would pay higher taxes, while big corporations and the top 1% get massive tax giveaways.
More than 5 million older Americans could pay higher taxes, and more than 10 million would not receive any tax cut under the Republican tax bill.
AARP: As a result of sunsetting the SFCs middle-class tax cuts, the projected number of taxpayers 65+ experiencing a tax hike would jump more than four times in eight years from 1.2 million in 2019 to 5.2 million in 2027. Add the 5.6 million older Americans who would see no tax change in 2027, and the total number of taxpayers 65+ not receiving a tax cut rises to 10.8 million.
Experts and CEOs continue to oppose the Republican tax plan, calling it a grand deception.
Reagan Tax Cut Architect: What they have here is a big tax cut for the rich paid for with random increases in taxes for various constituencies. Its ridiculous. And its telling that they are ramming this through without any debate. All of the empirical evidence goes against the tax cut.
Former CEO of Stride Rite: This tax bill is a grand deception. It hurts the most vulnerable, and hurts health care and education, which are essential for a healthy economy.
Favoring The Biden Strategy
Lamont and Republicans both say the timing is bad for tax increases as the states finances are finally stabilizing allowing for the first Wall Street bond rating increase in the past 20 years. The state is projecting a budget surplus of nearly $250 million in the current fiscal year, and the rainy day fund for fiscal emergencies is projected to rise to $3.8 billion later this year. Those numbers have continued to increase due to a record-setting pace on Wall Street as Fairfield County millionaires and billionaires pay hundreds of millions of dollars in capital gains that are paid through the personal income tax.
In addition, the major federal stimulus package that was passed by Congress and signed into law by President Biden will send $6.2 billion to Connecticut for state and local government over the next three years, including $1.75 billion directly into the state budget over the next two years.
Lamont, though, doubled down on his views about the timing and against capital gains taxes. Instead, he said in an interview that President Joe Biden should set the tone on tax increases at the national level so that taxpayers in all states are treated the same.
You May Like: Did Donald Trump Say Republicans Were Dumb
User Fees Would Force Biden’s Hand
If Republicans controlled Congress, its extremely unlikely theyd raise user fees or impose new ones to pay for an infrastructure plan. The federal gasoline tax, which is supposed to cover the costs of the national highway system, is a classic user fee because people who buy gasdriverspay into the fund that maintains the roads they drive on. But the gas tax has been stuck at 18.4 center per gallon since 1993, and its now too low to cover all the costs its supposed to. President Trump supposedly wanted a big infrastructure plan, and his fellow Republicans controlled Congress during the first two years of his presidency. Yet they never mounted a serious infrastructure plan, let alone new user fees to pay for it.
So why do Republicans favor user fees now? Because they would force Biden to break a core campaign promise, damaging him politically. Biden pledged not to raise taxes on households earning less than $400,000 per year, and any user fee applied broadly to the public would violate that pledge. User fees are actually a sensible and proven way to pay for big projects, yet Biden, for better or worse, has effectively ruled them out as a funding source for his ambitious plans.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: . You can also , and click here to get Ricks stories by email.
The Trump Tax Reform Conspicuously Targeted High
New York Governor Andrew Cuomo has always been more reluctant than other Empire State Democrats to soak the richjust last summer he warned that raising taxes on the states billionaires would mean theyd . But last week he agreed to a budget deal that boosts state income tax rates on millionaires and would leave New York Citys richest paying the highest combined state and local income tax rate in the nation14.8% on income above $25 million. New York hadnt held that dubious title since 2012, when California voters hit millionaires with a 13.3% rate.;
Cynics might suggest that Cuomo caved now because hes been politically weakened by allegations he sexually harassed subordinates and misled the public about the number of Covid-19 deaths among nursing home residents. But the Governor himself offered another explanation for his change of heart: taxes for the richest New Yorkers will actually go down. Huh?;
While attention has focused on Bidens plan to raise federal taxes on and earning more than $400,000, another tax war has been raging around the countryand is itself affecting Washington maneuvering. According to data collected by the Urban Institute, between April and December of 2020, a majority of states collected less tax revenue than in the year before, even as the pandemic put increased demands on their budgets. The five hardest hit statesAlaska, Hawaii, North Dakota, Nevada and Floridaare heavily dependent on tax revenue from either oil or tourism.
Read Also: Which 10 Republicans Voted To Impeach