Biden Gets Prodded From Left on Tax Hikes That Now Look Unlikely

President-elect Joe Biden had one of the most progressive tax plans of any presidential platform, and activists are trying to make sure the momentum doesn’t stop there.

But Biden won’t have decisive Democratic majorities in the House and Senate to work with, making grand plans tough to enact. At best, Democrats could have only narrow control of both chambers, depending on Jan. 5 runoff elections for two Georgia Senate seats.

The challenge isn’t deterring progressive groups, who argue that Biden has a mandate to enact proposals that the left wing of the Democratic party has been trying to make mainstream for years: taxing investment income the same as wages, putting a levy on offshore corporate profits and ending tax perks for assets the wealthy pass on to their heirs.

Frank Clemente, the head of Americans for Tax Fairness, said there’s nevertheless an opening to change tax laws so that the wealthy and businesses pay more. His group is launching a pressure campaign on the incoming administration and Congress to follow through on the president-elect’s pledge to raise taxes on the wealthy and on corporations.

“He stuck to his guns on tax issues. He took a lot of attacks, and didn’t shy away from it,” Clemente said. “He says himself he has a mandate.”

The Biden transition team didn’t immediately respond to a request to comment.

Revenue Estimates

Independent estimates say Biden’s tax plan could raise anywhere from $2.4 trillion to as much as $5 trillion. But passing the laws necessary to pull in that level of additional revenue will be a huge challenge, especially in the Senate, where the best-case scenario for Democrats is 50 seats, with Kamala Harris breaking the tie as vice president.

Together with a slim House majority, having such narrow control would elevate the influence of centrist Democrats like Representatives Mikie Sherrill of New Jersey and Abigail Spanberger of Virginia, who represent districts critical to the party maintaining control.

“We remain hopeful about the possibility of a Senate majority, which would hold open the possibility of advancing tax fairness through reconciliation,” Representative Don Beyer, a Virginia Democrat who is a member of the Congressional Progressive Caucus, said. “And if Republicans continue to feign the interest they have suddenly rediscovered in fiscal discipline, fair revenues are absolutely going to be part of that conversation.”

Reconciliation is a fast-track process for budget-related legislation that could get through the Senate with just a simple majority, rather than the 60 votes needed to overcome a filibuster.

‘Boldly Progressive’

Clemente says he’s working with members of Congress and transition officials to turn Biden’s campaign plan into legislation. He has outlined a 100-day tax agenda calling for a Biden White House to increase IRS enforcement, require presidential candidates to release their tax returns, and start rolling back tax preferences for wealthy individuals and businesses.

“Democrats can’t lose sight of the fact that Biden ran on a really boldly progressive tax agenda and he won decisively by more than 7 million votes. And I think that’s something we shouldn’t forget,” Seth Hanlon, a senior fellow at the left-leaning Center for American Progress, said. “Democrats have the public on their side.”

Biden’s plans concentrated the tax increases on those earning at least $400,000. Americans for Tax Fairness points to a November New York Times-Survey Monkey poll that shows raising taxes on that segment of the population is popular with 85% of Democrats, 70% of independents, and even 45% of Republicans.

There are some tax areas where Republicans and Democrats could find common ground, such as expanding the child tax credit. Republicans made that tax break more generous in their 2017 tax overhaul. Biden campaigned on further expanding the benefit.

“That’s one where they could shake hands and agree,” Gordon Gray, the director of fiscal policy at the right-leaning American Action Forum, said. “They can usually agree to borrow the difference.”

‘Real Problem’

Representative Judy Chu, a California Democrat, said she sees the possibility for agreement, pointing to existing bipartisan, progressive proposals that would “put money into the hands of those who need it, instead of relying on the completely debunked trickle-down theory.”

Those ideas would make the tax code more progressive by lowering taxes at the bottom end of the income spectrum. But raising taxes -- the centerpiece of Biden’s and progressive Democrats’ tax goals -- remains elusive.

Keeping progressives happy while also finding a way to work with congressional Republicans is “going to be a real problem for Biden,” said Brad Bannon, a Democratic strategist.

“With a small House majority, progressives have more leverage now,” Bannon said. “They can easily sit out a vote and make Pelosi’s life miserable.”

Pelosi’s Challenge

That creates an opening for House progressives to demand votes on major priorities ranging from taxes to climate change. Even if the bill is unlikely to advance in the Senate, progressives can ask for a House vote in exchange for supporting bills House Speaker Nancy Pelosi, the presumed top Democrat in the next Congress, wants to pass her chamber.

“That gives you something to run on,” Clemente said. “You can say: I have a mandate. The Senate blocked it so we need a new Senate.”

Democrats are confident that they can maintain public support even if their agenda in Congress is deadlocked. Just 27% of respondents to a 2019 Gallup survey said that high-income individuals pay their fair share in taxes, while 23% said that of corporations.

“Getting a tax agenda through Congress will be challenging in any scenario,” Hanlon said. But Biden “and Democrats should put pressure on Republicans on these issues where the public is on their side,” he said.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.