Randi Weingarten, the president of the American Federation of Teachers, took to Twitter this week to lobby for a tax break for the wealthy.
SALT is a way of delivering for the middle class. It puts the incentive system back in place to invest in localities, in sewer systems, in fire systems,in schools. That's why we want the Senate to follow the House’s lead in including #salt in #BBB https://t.co/r1PZdVMQ9G— Randi Weingarten (@rweingarten) December 8, 2021
Of course, expanding the state and local tax deduction (SALT) gives very little tax savings to the middle class.
Here’s the speaker of the house making the same argument as her chamber passed this tax cut for the rich as part of the Build Back Better bill last month:
>@SpeakerPelosi on SALT: "This isn't about who gets a tax cut, it's about which states get the revenue they need to meet the needs of the people"— Joseph Zeballos-Roig (@josephzeballos) November 18, 2021
So how can she claim this tax break, which most of the middle class would not get, “is a way of delivering for the middle class”?
The argument from Pelosi and Weingarten and other Democrats is that that subsidy to rich people ends up increasing state and local tax revenue, which turns into government spending, helping the middle class.
I call this (borrowing from the late Uwe Reinhardt) “feeding horses to feed the birds.” A less graphic term for it is “trickle-down economics.” Democrats love blasting trickle-down economics, by which they mean “cutting taxes for everyone across the board.”
Joe Biden, in his address to Congress this year, said, “My fellow Americans, trickle-down economics has never worked, and it’s time to grow the economy from the bottom and the middle out.” Then, he proceeded to push more trickle-down economics.
Build Back Better not only has a massive tax break that almost entirely goes to rich people (SALT), it also increases subsidies for people who buy electric cars. The electric car tax credits go as high as $12,500, up from the current $7,500. How do Democrats justify a tax credit that reduces to $0 the tax liability of a six-figure couple?
They say it will create jobs in manufacturing electric vehicles.
Give money to rich people, so that the rich people will buy something from General Motors, so that GM will hire workers.
Subsidizing the rich in the name of the working man has long been the Democrats’ economic policy. The Obama administration prioritized subsidies for private and corporate jets, even subsidizing Goldman Sachs exporting corporate jets to the largest bank in the world. All of these Democratic handouts to the wealthy are always explicitly done with the idea that the wealthy will eventually pass the money down to the working class. It’s like feeding a horse knowing that eventually, the birds will get to feast on what comes out the other end. If it happens to generate campaign contributions for the Democrats, well, that's a side effect, I'm sure.
Maybe that will work — I doubt it — but you can’t call it anything other than trickle-down economics.