Jared Golden made himself highly visible in Washington by being the only House Democrat to vote against the $1.75 trillion “Build Back Better” bill that’s now gone to the Senate, following passage of the $1.2 trillion bipartisan infrastructure measure President Biden signed into law Nov. 15.
Maine’s 2nd District congressman is thus the only Democrat who voted against both BBB and the American Rescue Plan – another Democrat-only measure – signed by Biden on March 11.
In both instances, Golden complained the bills cost too much, but his main objection to BBB is that it restores the deduction for state and local taxes axed by the 2017 Trump tax cut.
The objection seems peculiar; tax preferences rarely rouse passions among either Democrats or Republicans. Tax policy is essentially ignored by public and press alike, even though it can profoundly affect our lives, far more than the “culture wars” trotted out to distract us.
Golden claims that allowing full deductions for state and local taxes is a giveaway to the rich, saying, “If we can’t raise taxes on millionaires and billionaires then these programs that are important for working-class people won’t be sustainable in the future.”
This is disingenuous. All deductions and credits against the progressive federal income tax tend to benefit high-income earners. Since they make the most money, they pay the most in taxes – and they should.
What Golden fails to point out is why Democrats are trying to restore the deductions, repealed as one of many insidious features in the 2017 tax cut.
The deduction essentially encourages states to use their own progressive income taxes to raise revenue, rather than the sales, excise and property taxes that bear most heavily on low-income taxpayers.
Several large “blue states,” including California, Illinois and New York, did just that to make up for persistent shortfalls in federal support for domestic programs, from housing assistance to land conservation.
Seeing the trend, the Republican tax experts who actually wrote the Trump bill decided to curtail the deduction, creating a “double tax” on income that was so abhorrent to the GOP when applied to corporations.
In essence, states are now penalized for taxing the rich, with the intent of making state taxes even more regressive. Maine is among the states whose residents – constantly fleeing to low-tax Florida, we’re told – benefit from the deduction.
It’s now even more difficult to get legislators interested in restoring Maine’s original, 1969 version of the progressive income tax, chipped away at ever since.
But there’s more. In 2017, the GOP decided to eliminate the personal exemption and fold it into an expanded standard deduction of $24,000.
This is hardly likely to rouse the ordinary taxpayer’s ire; it sounds reasonable. But there are two pernicious effects.
Working families with children, who got extra personal exemptions, lost them. More important, most middle class taxpayers lost any incentive to donate to charity because the new standard deduction eliminated their need to itemize.
For the typical home-owning couple, combined mortgage interest, charitable contributions – and state and local tax exemptions – meant they itemized, and could deduct additional gifts.
As it stands, the wealthy get full deductions for giving money to their own foundations, while the charitable deduction incentive is gone for anyone else. This can hardly be what Rep. Golden means about “protecting working families.”
And if we’re truly interested in “raising taxes on millionaires and billionaires,” as Golden suggests, there was plenty more in the original Biden bill. Golden was notably silent as provisions to restore previous corporate and individual rates were stripped away in the Senate, at the behest of two “moderates.”
We’ll have to do a lot more taxing the rich, not less. It simply won’t be possible to manage the enormous public investment needed to “decarbonize” the economy and stave off catastrophic global warming without far more tax revenue, and it can’t come from people who live paycheck to paycheck; when it comes to incomes, this society is painfully unequal.
Scuttling the state and local deduction was simply one element in a thoroughly bad tax bill Republicans foisted upon the country. That’s why Trump’s bill remains overwhelmingly unpopular among voters, while BBB is equally popular, even among Republican voters – though not GOP lawmakers.
Golden’s stance is a highly selective one, and suggests that no amendments likely to pass muster would have pleased him. If he consulted his constituents before deciding how to vote, it would be interesting to hear the results.
There’s plenty of work to do to restore the tax code nearer something that works for the average American, and average Mainer. Even If BBB does become law, the fight is just beginning.
Douglas Rooks, a Maine editor, commentator and reporter since 1984, is the author of three books. His first, “Statesman: George Mitchell and the Art of the Possible,” is now out in paperback. He welcomes comment at drooks@tds.net
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