Republican John Kasich carted a digital debt clock around the campaign trail four years ago, sounding the alarm about the nation’s sea of red ink and showcasing the chief role he played in Congress balancing the federal budget in the 1990s.
Now Mr. Kasich is reportedly expected to speak at the Democratic National Convention on behalf of Joseph R. Biden, the presumed Democratic presidential nominee who is vowing to raise $4 trillion in new taxes to expand and create new government programs — not to pare down the deficit or debt.
That prospect illustrates how the debate over what’s best for American voters when it comes to Uncle Sam’s tax bite has been swallowed up by the coronavirus and attempts to make the election all about President Trump’s cult of personality and his divisive rhetoric.
The policy views between the two candidates, however, are stark, including when it comes to the government’s rake-off.
“I think the Biden tax plan, taken in totality, is a very different vision of what tax policy would look like under the current president,” said Garrett Watson, a senior policy analyst at the Tax Foundation. “Former Vice President Biden is looking to increase taxes on higher earners and businesses with the goal of raising revenue for government services he is proposing and lowering wealth and income inequality, which he thinks is an issue.
The $1.5 trillion Tax Cuts and Jobs Act of 2017 arguably stands as the signature achievement of Mr. Trump’s first four years in office.
It was the most sweeping tax overhaul in decades, cutting the corporate tax rate from 35%, the highest among developed nations, to 21% and lowering individual tax rates.
But the GOP lost control of the House in 2018, and the tax legislation has become a favorite target of Democrats.
They say it padded the pockets of big business at the expense of workers, and they say it shows that the GOP’s outrage over Obama-era deficits and debt — which has risen from $19.5 trillion to $26.5 trillion on Mr. Trump’s watch — was a political sham.
Mr. Trump and his allies are pushing back, warning that Mr. Biden’s tax plan would depress wages, hurt retirement accounts and slow economic growth at the worst possible time.
“Biden wants to come in and ruin our country, triple your taxes,” Mr. Trump said on “Fox News Sunday.”
Ronna McDaniel, chairwoman of the Republican National Committee, said “never has there been a clearer contrast between two candidates’ tax plans as exists between President Trump and Joe Biden.”
“The kind of tax increases Biden envisions would throw a big wet blanket on the great American comeback President Trump is leading, and is just one of the many reasons voters overwhelmingly trust the president to rebuild our economy a second time,” Ms. McDaniel said in a recent op-ed.
Roughly 100 days from the election, taxes barely register as an issue, coming in at 1% on the list of likely voters’ most pressing concerns, according to a Fox News poll released last week that found the most important issues are the coronavirus, 29%, the economy and jobs, 15%, and race relations, 10%.
The dynamic could pose a challenge for the president, who also has been facing backlash from anti-Trump Republicans willing to toss aside traditional GOP tax-cutting orthodoxy because — in the words of Tim Miller, political director of Republicans Voters against Trump — the president is “an incompetent bigot.”
“His response to the pandemic was wildly irresponsible and has resulted in substantial unnecessary death and economic destruction ravaging our country while others are rebounding,” Mr. Miller said.” He doesn’t believe in American values of freedom of religion, pluralism and the rule of law.”
Mr. Miller laughed at the idea that Mr. Trump is beholden to small government orthodoxy, pointing to the trillion-dollar deficits, “massive tariffs, federal stormtroopers menacing protesters.”
“Joe Biden and I might not agree on every issue, but at least he will be a president for all Americans and spend time trying to fix problems rather than binge-watch TV and send out whiny, hateful tweets,” he said.
Mr. Biden has tried to appeal to his party’s left wing with a plan that would unwind a chunk of the Trump tax cuts and raise close to $4 trillion in new revenue, marking a dramatic jump from the $1 trillion tax increase that candidate Hillary Clinton offered up in 2016.
“While Biden’s plan was branded as moderate compared to Bernie Sanders or Elizabeth Warren in the primary, it is still very much a progressive plan that would increase taxes, primarily on higher earners, but we also found that the plan would reduce after-tax income for everyone across the income spectrum,” Mr. Watson said.
Under the Biden tax plan, the federal government would dig deeper into the pockets of wealthy Americans and corporations, rolling back parts of the Trump tax cuts on households making $400,000 or more and raising the corporate tax rate to 28% from 21%.
“Biden has made it a key pillar of his tax plan to reverse portions of Trump’s tax cut — specifically he has stated he would like to reverse the individual tax cuts provided to high-income households,” said Kyle Pomerleau, a senior fellow at the free-market American Enterprise Institute.
The Biden proposal would increase the tax on capital gains for people making more than $1 million from roughly 23.8% to 43.4%, according to a Tax Foundation analysis. It also would repeal a law that has shielded people from a capital gains tax on inheritances of stocks and other assets.
The Biden-Sanders unity task force also recommended that the estate tax, also known as the “death tax,” “should also be raised back to the historical norm.”
The Trump tax cuts reduced the corporate tax rate from 35% to 21% and more than doubled the estate tax exemption to $11 million from $5 million for individuals, and to $22 million from $11 million for couples.
The new revenue would be used for new programs and for beefing up others that Mr. Biden argues will strengthen the working class and struggling families.
Mr. Pomerleau said the Biden proposal doesn’t appear to address the deficit or debt.
“If you were to take all of that revenue and apply it to the deficit… the government would still need to cut spending pretty drastically in the future to balance the budget and stabilize the debt,” he said. “So from a fiscal policy standpoint, Biden is not really focused on that.”
Mr. Biden has vowed not to raise taxes on people making less than $400,000, but Mr. Pomerleau and other tax analysts say his plan could hurt workers’ wages and 401(k) retirement plans.
They also say his cap on tax deductions at 28% would hurt households earning between $200,000 and $400,000.
Mr. Garrett said there is another reason to be cautious about the timing of the Biden proposal.
“The fear is that it would hamper the economy’s ability to recover where we were before the coronavirus hit and would keep us in the hole longer than we otherwise would,” he said. “So we should be very careful raising taxes now, especially given how delicate a situation we are going to be in the next few years economically.”
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