Charlie is correct to celebrate the American success story, unique in the developed world, of having a stable low-tax political consensus for the vast majority of the population. Democrats are still wrong to support jacking up the corporate tax and other taxes that punish investment, and punitive taxation on the wealthy is bad policy. There’s a meaningful difference between the political parties on taxation, and the Republicans are better. But it still remains the case that the median voter is dead-set against European-style middle-class taxation, and both parties recognize that they need to be against it, too, if they want to win elections.
By today promising to keep Joe Biden’s pledge not to raise taxes on people making less than $400,000 (that’s 98 percent of taxpayers), Kamala Harris has also, whether she realized it or not, promised to extend the individual provisions of the Tax Cuts and Jobs Act, the law Trump signed in 2017, for nearly all taxpayers.
The individual provisions of the law are set to expire at the end of 2025. No matter who wins in November, tax policy will be a major focus of the first year in office.
Democrats have lied for years about the TCJA, saying it was a tax cut only for the wealthy. In fact, it cut taxes across the board, with significant benefits going to middle- and low-income households.
The Tax Foundation has modeled several different scenarios for people who make less than $400,000. If the individual provisions of the TCJA are allowed to expire at the end of 2025:
- An individual with no children and an income of $30,000 will face a tax increase of $254.
- A married retired couple with an income of $48,000 will face a tax increase of $340.
- An individual with two children and an income of $52,000 will face a tax increase of $1,475.
- An individual with no children and an income of $75,000 will face a tax increase of $1,708.
- A married couple with two children and an income of $85,000 will face a tax increase of $1,662.
- A married couple with two children and an income of $165,000 will face a tax increase of $2,451.
- A married couple with three children and an income of $200,000 will face a tax increase of $7,450.
Allowing the TCJA individual provisions to expire would clearly raise taxes on people making less than $400,000. If a Democrat is essentially promising to keep 98 percent of Republicans’ tax law in order to be electable, that has to be considered a win for Republicans in the court of public opinion.