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Democrats Shift Focus to Infrastructure

Image: Democrats Shift Focus to Infrastructure
U.S. Sen. Bernie Sanders I-Vt., (C) pauses during a news conference at the Capitol March 7, 2018, in Washington, D.C. Senate Democrats held a news conference to discuss their one trillion infrastructure plan. (Alex Wong/Getty Images)

Wednesday, 14 Mar 2018 11:29 AM Current | Bio | Archive

Democrats made a passionate and extended case against the tax bill President Donald Trump signed in December. The Senate Democrats’ new tax-and-infrastructure plan walks away from that case in nearly every particular.

The proposal undoes parts of the new tax law in order to fund increased infrastructure spending. But it revises the tax law in ways that fit poorly with the arguments Democrats were making in the very recent past.

The plan raises the corporate tax rate to 25 percent, which Republicans cut from 35 percent to 21 percent. The Republicans exempted many upper-middle-class families from the alternative minimum tax and raised the threshold for the estate tax; the Democrats would undo both cuts. The Republicans cut the top statutory tax rate on income from 39.6 percent to 37 percent. Democrats want to go back to 39.6.

Compare the plan with the party’s rhetoric over much of the last year, and the disjunction is evident.

Democrats said that the Republicans were giving a windfall to corporations by cutting their tax rate. Corporations were already sitting on cash and did not need extra money to invest, they said. Yet their tax plan would undo less than a third of the reduction in the corporate tax rate.

Democrats — and, indeed, tax-policy experts from both parties — argued that the Republican tax law treated pass-through businesses too generously. The Democrats are leaving the pass-through break alone.

Democrats savaged the Republican tax bill for including time limits for middle-class cuts. Corporations got their tax cuts permanently, but the expansion of the child credit and the standard deduction were scheduled to expire after 2025. Guess what? Under the Democratic proposal, that’s still the case. The middle-class tax cuts expire on the same schedule, and corporations keep a permanently lower rate than they had before Trump.

Few provisions of the new tax law aroused more ire than its new cap on the deductibility of state and local taxes. Democrats called it a partisan tax increase on Democratic voters. Democratic governors sued over the issue. But the party's plan leaves the cap in place, while exposing many of the same people affected by it to the alternative minimum tax, since the plan undoes Republican reforms to it. The effect is probably to make blue states pay even higher taxes.

A possible defense of Senate Democrats’ inaction on the deduction for state and local taxes and the middle-class tax cuts would be that this plan includes only those provisions needed to pay for increased infrastructure; it does not rule out later proposals to address these concerns.

But if Democrats raise the top income tax rate to 39.6 percent and use the proceeds to help pay for infrastructure, they can’t use those proceeds to finance a bigger state and local tax deduction or permanent tax relief for the middle class. They can’t use the new corporate tax revenue for those purposes either.

For that matter, Democrats could have announced a plan to extend the middle-class cuts and protect blue-state taxpayers before an infrastructure plan. It is fair to infer that these causes are lower priorities for the Democrats than infrastructure spending. It is fair, as well, to infer that the Democrats are revealing how overblown their tax rhetoric was over the last year.

Ramesh Ponnuru is a Bloomberg View columnist. He is a senior editor of National Review and the author of “The Party of Death: The Democrats, the Media, the Courts, and the Disregard for Human Life.” To read more of his reports — Click Here Now.

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Democrats made a passionate and extended case against the tax bill President Donald Trump signed in December. The Senate Democrats’ new tax-and-infrastructure plan walks away from that case in nearly every particular.
tax, democrats, middle, class, cuts, infrastructure, republicans, law, republican, corporate, corporations, deduction, taxes
Wednesday, 14 Mar 2018 11:29 AM
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