‘Tax giveaways to millionaires’: Democrats’ ‘Salt’ plans divide party

Susan Knudsen, mayor of Ridgewood, New Jersey, stood before a large salt mound earlier this year to protest what she sees as one of America’s greatest injustices.

For nearly 100 years, residents of towns such as Ridgewood have been able to deduct their larger state and local taxes, or ‘Salt’, from their tax bill. Following Donald Trump’s tax reform in 2017, the deduction reached $ 10,000.

In places like Ridgewood, where local taxes are more than $ 18,500 per house and help pay for the most respected schools in the town, the interest rate has affected some people.

That is why Knudsen’s spirits flared up last week when US President Joe Biden and the House Democrats pushed for a $ 1.75tn bill that would – in addition to achieving the party’s major goals of strengthening the country’s security net and increasing its response to climate change – boost. a cup of Salt to $ 80,000 by 2025.

“This will be a relief to many,” said Knudsen, thanking Josh Gottheimer, a member of the Democratic Congress whose constituency includes Ridgewood and other high-tax towns in northern New Jersey, and drawing a line on the sand above the Salt. .

But what sounds like a relief to Ridgewood sounds unfair everywhere – even to many Democrats. From Maine to Montana, party members are rejecting what they consider to be a $ 275bn grant to the rich, according to the Congressional Budget Office, making it the second largest bidder to sign the Biden Build Back Better Bill.

The controversy is fueling tensions in the growing party between progressive and minority groups, and another setback for the Build Back Better bill as it heads to the Senate after a stone’s throw.

“If you had told me last year that the second largest part of this Congress signature is $ 280bn taxing millions of people, I would have told you that Republicans are in charge,” said Jared Golden. A Maine Democrat who was the only member of the House of Representatives to vote against Build Back Better.

According to a survey by both non-Tax Policy Center and the fiscally hawkish Center for a Responsible Federal Budget think-tank, 94 percent of the benefits of adding a cup of Salt to $ 80,000 will go to the highest quintile of the highest paid nationwide – one. earns less than $ 175,000 a year – and 70 percent to a top five percent.

Vermont Senator Bernie Sanders has called for a raise Salt “Bad politics” and “bad policies”, he told reporters at Capitol Hill: “We should ask the rich to start paying their taxes, without giving them too much tax.”

Jason Furman, a former financial adviser to former President Barack Obama, has condemned what has been done in the past to end the practice as “disgusting”.

Meanwhile, Republicans, after taking on greater criticism for lowering taxes on the rich, are happy with the opportunity to denigrate the bill as a license for wealthy democracies who campaign in highly taxed states such as New York and California.

Mitch McConnell, a Republican Senate president, called it a “bonanza of blue millionaires and billions”.

“They are just talking about the deceptions of democracy,” said Republican scholar Doug Heye.

The Biden government looks like a lamb in response. Jen Psaki, press secretary at the White House, told reporters that the President’s excitement over the package “has nothing to do with Reduce salt; and for other major states ”.

Vermont Senator Bernie Sanders speaks at a press conference

Vermont Senator Bernie Sanders has suggested a reduction in salt emissions based on his income, and a possible reduction for people earning more than $ 500,000 a year © Getty Images

But Howard Gleckman of the Inquisition said in a statement that it was important for Democrats to vote in the by-elections next year.

“[House members from high-income areas] they could lose their elections if they could not provide relief, “and if they lose their seats, it increases the chances of Democrats losing control of the House.”

Recent developments are unknown as they would require the support of all 50 Democrats in the Senate. One plan by which Sanders and New Jersey Senator Robert Menendez could reduce their retirement benefits, and cut costs for people earning more than $ 500,000 a year.

“The message is that Salt will be tax-free for the rich – and that is not wrong,” said Michael Hayes, a professor of public policy at Rutgers University.

However, Hayes argued, the Salt Cup was also more complex than it was, in part because of the strong economic impact on areas such as housing prices and construction companies.

While Salt may seem daunting to Democrats, in places like New Jersey you can feel the presence. The state has the highest tax rates in the world, at about $ 9,112 in 2020. In contrast, states including Louisiana and Alabama averaged less than $ 1,000.

Anger over the Salt Cup helped Democrats in New Jersey like Mikie Sherrill and Tom Malinowski sweep through Congress in the former Republican states in 2018. Meanwhile, this month election of governor it served as a shocking reminder of the frustration of voters in high taxes when a prominent Republican man almost annoyed his MP Phil Murphy in some way by knocking on the door.

The dreaded fear of the Salt Cup was that greater taxes would not only reduce the population but also erode the local property. To date, that has not happened. One reason may be that the plague caused many city dwellers to flee to the countryside.

“To be honest, I didn’t find the buyer who brought it to me,” said Claudia Inoa, an assistant at Keller Williams in Ridgewood.

According to Knudsen, it has been difficult to assess how much the Salt Cup was affected in the midst of the crisis and the financial crisis. When people moved to Ridgewood, where the capital of a well-known village was set up earlier this week for Christmas, they understood what the town had to offer, the mayor said: big taxes in exchange for public high schools.

One reason why taxes are so high is its prices. As of October, the median housing bid was $ 872,000, according to Realtor.com, up 11.5 percent from a year earlier.

However, Knudsen argued that it was wrong to think that getting rid of the hat would benefit only the rich. “Not everyone here is rich,” he said. “There are a lot of people who find the middle income affected.”

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