Taxing, spending and Building Back Better

Even though the process has been annoying, and the corruption of 4% of Senate Democrats has been screwing it up for the rest of us, it looks like we might be getting to a final price tag for a Build Back Better plan that can get through Congress.

Manchin - who, along with fellow moderate Senator Kyrsten Sinema, has been pushing for a smaller package - said he believed Democratic negotiators could settle on a final figure by Friday. That would resolve a key sticking point, though progressives and moderates would still have to sort out the substance of the bill, including what programs to keep, what to cut, and how long to fund them for.

"We're looking at everything today and tomorrow and hopefully we can either have a framework: We agree or disagree and (it) is either irreconcilable or it is something we can work out," Manchin told reporters on Capitol Hill….

Biden told lawmakers on Tuesday he thought he could get Manchin and Sinema to agree to a figure in the range of $1.75 trillion to $1.9 trillion, according to a source familiar with the talks, who spoke on condition of anonymity.

Getting to that number would mean giving up priorities, including a plan to offer all Americans the opportunity to attend two years of free community college, and scaling back others such as a child tax credit and funds for affordable housing.

“Scaling back” is not great, but if you can keep the payments for the child tax credit going and help people obtain and stay in housing, those items will likely be very hard to take away. Just get them in place and get things running, and voters will reward it.

A question on the Build Back Better plan is how it gets paid. And what seemed to be a no-brainer may be derailed by….a no-brainer.

Taxes remain a sticking point as well; Sinema has told the White House she will not support Biden's proposed rate increases for corporations and wealthy individuals. The White House told some Democrats this week that the corporate tax hikes may be dead.

You have to be one helluva fool who’s getting paid off by rich a-holes to be against making the rich and corporate give back a small amount of the massive tax breaks they got 4 years ago. Especially when you arrived in Congress saying things like this.

@dsantosjr @Johartz @brahmresnik @dannowicki Asking big corporations & the rich to pay their fair share is common sense, not class warfare.

— Kyrsten Sinema (@kyrstensinema) May 26, 2011

Why doesn’t she just quit, which allows Dems to replace her and lets her grift into more money and TV appearances? I digress.

So instead, we might end up with a different type of tax hike on the ultra-wealthy.

Senate Finance Committee Chairman Ron Wyden, meanwhile, floated a "billionaires income tax" proposal that congressional sources said would apply to around 700 taxpayers and would raise hundreds of billions of dollars in fresh revenues to help offset the cost of the Biden plan.

A source familiar with the White House's thinking on the billionaires tax said: "The president is favorably disposed towards this tax, as well as a series of other options that would ensure the wealthy pay their fair share and make the price tag."

The plan aims to clamp down on some billionaires who find loopholes to avoid or significantly lower their tax payments.

The congressional sources said the tax would apply to taxpayers with more than $1 billion in assets or over $100 million in income for three consecutive years.

Another part of the GOP Tax Scam that lingers is the question of what happens to the limit on write-offs for state and local taxes (aka the SALT deduction). This is a provision that limits this write-off to $10,000 for both single filers, and for married couples filing jointly.

While GOPs claimed that the SALT limit was intended to make tax filing simper, in reality it was a measure targeted at blue states that rely on income and property taxes to fund their governments. And when combined with the larger standard exemption in the Tax Scam, it wasn’t worth it for many married couples (especially) to use that SALT deduction, or other write-offs like charitable contributions and mortgage interest.

Still soooo punchable.

SALT Cap reform has been a constant call from Dems since 2017, and some are claiming that not changing it this time might be a deal-breaker for the larger bill.

“I want something done, obviously, on the SALT issue,” said House Ways and Means Chair [Richie] Neal, who also supports additional relief. “I think it's a complicated matter, often said that one of the challenges with the SALT deduction is that there's some truth to what everybody says. And I'm looking for a remedy that will address the concerns of what everybody says.”

Democrats who are closely following developments know they will have to make some concessions to the New York and New Jersey Democrats to assemble their bill. One idea under discussion is to cut the marriage penalty on the SALT deduction, essentially allowing married couples to double their deduction. Another idea would be to raise the cap by a few thousand dollars, rather than eliminate it entirely, to give families in high-cost areas some relief.

Other Democrats, including [Rep. Tom] Malinowski, are floating proposals to raise the deduction cap over 10 years. Since the existing $10,000 cap expires at the end of 2025, they point out that even a significantly higher cap would technically be a tax increase after that — meaning they can claim budget savings in the following years. They believe they’d found a way to make the policy entirely revenue neutral, though talks are still ongoing with party leadership and the White House.

That last idea seems to be too clever, but getting rid of the SALT Cap’s marriage penalty seems like a logical move. This would limit how much of a tax break richer people would get, and it would make a big difference for two-earner couples who own homes in places with a sizable cost of living (raises hand).

But raising/removing the SALT Cap would also lower tax revenues, which leads to a balancing act between fulfilling campaign promises of Dems who said they would fix the SALT issue, and promises that the Build Back Better bill wouldn’t add much (if anything) to the deficit. The idea was that raising taxes on the rich and corporate would take care of both of these concerns, but you can see where the Sinemas of the world monkey-wrench that idea.

In fairness, the SALT Cap change could be done as part of the regular budget to fund the Federal Government for the rest of FY 2022. Right now, that deadline is looming in 6 weeks, and if done right, the SALT Cap could be made retroactive to include the 2021 Tax Year, which would mean the larger write-off goes into people’s pockets when they file next Spring, before the midterms. Seems like a plan to me.

And as part of that plan, House Dems should vote first, with an agreement that works for all sides of their caucus, and throw that agreement onto the Senate floor. I have a feeling that once Manchin/Sinema are not in a place to negotiate behind closed doors and actually have to go on the record, they’ll not want to be known as the people who tanked an investment and support package that real America wants.

But the time for haggling needs to be over, and Build Back Better needs to be put into place sooner than later, so people can see just what they’ve been missing as our safety net has been eradicated and our middle class hollowed out over the last 40 years.

Having these initatives up and running by Summer 2022 also allows Dems to remind the voters who delivered that needed support, and who tried to stop things from getting better and more secure.