Silicon Valley's tax fatigue is becoming a bipartisan national issue
Nathan Currier: The Destruction of Tea at Boston Harbor, 1846
SJ's so-called business bloc—led by Mayor Mahan and CMs Casey and Mulcahy—continues to advocate for higher taxes. But they're running contrary to growing opposition to new taxes at all levels of gov't—from both the Left and Right. Cato Institute reports.
Perhaps surprisingly, there is general bipartisan agreement on tax cuts. Republicans and Democrats often propose different types of tax cuts—with different implications for economic growth—but most want to reduce federal revenues collected from most Americans all the same.
As Congress begins to grapple with the coming 2025 fiscal deadlines, it’s worth understanding that many Democrats support about three-quarters of the Republican tax cuts. And many more suggest expanding the tax cuts further. Politicians’ desire to keep taxes low is admirable, but keeping taxes low for the long haul will also require keeping spending in check.
Democrats have their own tax-cutting agenda. For example, in 2022 they passed an almost trillion-dollar corporate tax cut through energy and other credits as part of the Inflation Reduction Act (which will reduce revenue even with the offsetting tax increases).
There is broad congressional support among Democrats for an increase to the child tax credit and earned income tax credit in the ballpark of $1.7 trillion over ten years.
Many Democrats also support eliminating the cap on the state and local tax deduction, effectively cutting taxes for the wealthiest taxpayers by as much as $850 billion over 10 years (from a current policy baseline).
Democrats also have lots of proposals to increase taxes on businesses and high-income Americans, but none can pay for the trillions of dollars of tax cuts most members in Congress support. Confiscating all the annual income earned by Americans above $400,000 a year would not cover the currently projected deficits, let alone any additional spending or lower taxes.
Simply because there is bipartisan consensus to keep taxes low on more than 95 percent of Americans does not mean such tax cuts are possible without other reforms. If policymakers want to permanently extend the 2017 tax cuts, they will need to pursue spending reforms and eliminate politically popular tax subsidies.
Both Republicans and Democrats want to keep taxes from rising on the vast majority of Americans, and most legislators also want to protect higher-income Americans from punishingly higher taxes. These simple facts are irreconcilable with current spending levels and the rhetoric from both parties about what types of spending are off the table. Fiscal fantasies run deep in both parties.
Policymakers’ instincts are correct; it is best to keep taxes low on Americans at every income level. However, keeping taxes low will require spending cuts. Otherwise, taxes will necessarily have to increase in the coming years.
Read the whole thing here.
Follow Opportunity Now on Twitter @svopportunity
We prize letters from our thoughtful readers. Typed on a Smith Corona. Written in longhand on fine stationery. Scribbled on a napkin. Hey, even composed on email. Feel free to send your comments to us at opportunitynowsv@gmail.com or (snail mail) 1590 Calaveras Ave., SJ, CA 95126. Remember to be thoughtful and polite. We will post letters on an irregular basis on the main Opp Now site.