Tax on the rich? No, US Democrats may plan to cut taxes

Tax on the rich?  No, US Democrats may plan to cut taxes

A US Democratic Party bill to invest $1.75 trillion (about R$9.9 trillion) in a “green economy” could generate a tax cut for the richest 5% of Americans, according to a new analysis. offer, name build back better (Rebuild Better), issued by the White House last week, calls for tax increases for the wealthiest families, including surcharges for multi-millionaires and billionaires.

Conversely, however, observers warn that the bill could include a repeal of US$10,000 (about R$56,000) on federal deductions for state and local taxes, known as SALTs – resulting in, Finally, cutting the taxation of the richest. Some Democrats have said they will not vote for legislation without taking action on the SALT ceiling, which has been a typical issue in California, New York, New Jersey and other high-tax states.

The bipartisan Committee on a Responsible Federal Budget (CRFB) highlighted an excerpt from an analysis released on Friday that said repealing the SALT limit would more than offset the planned increase in US taxes.

“If included [na proposta]According to the CRFB’s calculations, repeal of the two-year SALT ceiling would reduce the tax on the richest 5% by more than US$70 billion (about R$393 billion). With this, repeal of the SALT ceiling would result in a net direct tax cut of $30 billion for wealthy taxpayers.

A 2017 tax law signed by former President Donald Trump put a $10,000 limit on the amount of state and local taxes (including property taxes) that families can deduct from their federal taxes.

Larry Summers’ vision

According to a 2018 analysis by the organization, the top 20% of households will get more than 96% of the benefits of canceling the SALT ceiling. tax policy center.

“If lawmakers do indeed intend to raise taxes on top earners, repealing the SALT ceiling makes that goal more challenging,” the CRFB wrote. “Instead, a more progressive and financially responsible decision would be to abandon the repeal of the SALT ceiling.”

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Larry Summers, a former economic adviser to Barack Obama and former Treasury secretary during the Clinton administration, has expressed concerns about the financial implications of the legislation.

“I’m certainly not a left-wing ideologue, but I think something is wrong when taxpayers like me, in the top 0.1% of the income distribution, get a significant tax cut on a tax bill, especially for Democrats, like now. It seems likely to happen,” Summers tweeted on Sunday (31).

The Build Back Better proposal calls for new taxes on the rich. This includes a 5% surcharge on income over US$10 million (approximately R$56 million) and an additional 3% tax on income over US$25 million (approximately R$141 million). In addition, the proposal removes loopholes that allow some wealthy taxpayers to avoid paying 3.8% net income tax on investment income.

“There’s no compromise!”

Importantly, there are still many unknowns here, including whether or not Democrats will reach the SALT ceiling. The CRFB warned that the numbers in its estimate are “approximate” and that the final figures may change when a reconciliation package is released by the Joint Taxation Committee.

Representative Tom Suozzi of New York has warned he expects congressional action on SALT. “Without salt, there is no deal! I believe he will be part of the final deal,” the Democrat said in a tweet.

Strategists at investment bank Raymond James said that if SALT were changed, the “most likely outcome” is that the law would remove the SALT cap for two years, potentially with either income or total dollar caps.

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“It’s a budget math and a political movement to offer Democrats temporary tax cuts, especially for high-tax Democratic states,” Raymond James’ strategists wrote in a note last week.

In this scenario, the SALT ceiling would be eligible for refund after two years. The CRFB said the reconciliation project “will almost certainly raise taxes on top earners if and when the SALT ceiling’s repeal ends.”

(Translated text. Click right here to be read in original English).

About the author: Sarah Gracie

"Proud social media buff. Unapologetic web scholar. Internet guru. Lifelong music junkie. Travel specialist."

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