The Democrats are about to make a trillion-dollar mistake |
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The Democrats are about to make a trillion-dollar mistake
The party must not surrender to the tax revolt.
A bold new idea is taking the Democrats by storm: massive middle-class tax cuts.
Last week, two of the party’s rumored 2028 candidates — Sens. Chris Van Hollen and Cory Booker — unveiled plans to fully exempt tens of millions of Americans from federal income taxes.
• Sens. Cory Booker and Chris Van Hollen want to eliminate federal income taxes for tens of millions of Americans, financed by taxing the super rich.
• But their plans are incompatible with their own proposals for expanding the welfare state.
• It’s more important to reduce child poverty and expand public health insurance than to reduce the middle-class’s (already low) tax rates.
Under Van Hollen’s policy, individuals who earn less than $46,000 — and married couples who earn less than $92,000 — would owe nothing to Uncle Sam each year (outside of their payroll taxes, anyway). And millions of Americans who earn more than those sums would also receive a hefty tax break. Under Booker’s plan, meanwhile, Americans would pay no federal income tax on their first $75,000 in earnings. Both senators would finance their tax cuts by soaking the super rich.
The details of the two bills vary considerably. But each reflects the same general proposition: The Democratic Party needs its own “No Tax on Tips.”
In 2024, Donald Trump endeared himself to many service workers by arguing that their tipped income should be exempt from federal taxes. Kamala Harris quickly embraced the policy. But by then, Trump had already branded the GOP as the party of simple, sweeping tax cuts for the working class.
Many Democrats want to steal that mantle. And “no federal tax on any of your income” presumably beats “no tax on tips” (or, as Trump has also enacted, “no tax on overtime”).
But the two proposals also represent the culmination of a decades-long trend in Democratic politics.
Call it the rise of 99 percentism: The belief that only the top 1 percent, or even the small coterie of billionaires within it, should be expected to finance government benefits.
For much of the 20th century, Democrats were comfortable asking the middle class to pay higher taxes in exchange for more services. By the 1990s, however, the party no longer had the stomach to raise taxes on anyone but the upper middle class and above. In 2008, Barack Obama promised not to raise taxes on any family earning less than $250,000; in 2020 and 2024, Joe Biden and Kamala Harris raised that cutoff to $400,000.
The party’s left flank, meanwhile, has also lost its enthusiasm for broad-based taxation. In her 2020 presidential run, Sen. Elizabeth Warren (D-MA) proposed a wealth tax on fortunes of over $50 million. More recently, Sen. Bernie Sanders (I-VT), one of the last prominent voices on the left to champion higher middle-class taxes, unveiled his new “defining vision for our age” — a bevy of new social programs funded exclusively through wealth taxes on billionaires.
This shift has a coherent political logic. Democrats have grown increasingly dependent on upper middle-class support — while Americans writ large have grown increasingly distrustful of their government (and thus, more reluctant to shoulder the costs of expanding it).
As a substantive matter, however, 99 percentism is incoherent. Democrats can support a robust welfare state or ultra-low taxes on the middle class — but they can’t do both.
“If what you end up with is a tax code that is nominally progressive but low, you will have a........