This tells us a great deal about the state of the Democratic Party and how it has affected Biden, who is assumed to be the ideologically moderate choice for president (along with other candidates, including Pete Buttigieg and Amy Klobuchar). The plan’s main features:
- End the preferential treatment of investment income for those making more than $1 million a year. Right now, you pay higher taxes on wage income (money you get by working) than on investment income (money you get when your money makes you more money). Biden’s plan would tax all that income the same for the extremely wealthy.
- Raise the corporate tax rate to 28 percent.
- End the “stepped-up basis rule” that allows people who inherit stocks and property to pay little or no taxes on those assets.
- Institute a 15 percent minimum corporate tax, to prevent corporations from using loopholes to reduce their tax bills to nothing.
- Raise the top income tax rate to 39.6 percent, where it was before the Trump tax cuts.
- Cap the amount of deductions the wealthy can take.
There are a few other proposals (here’s a good rundown), but those are the most significant ones. It’s true that it doesn’t contain the kind of wealth tax that Warren and Sanders have proposed. And as Josh Bivens of the Economic Policy Institute pointed out to me, it does accept some features of the Obama-era tax code as the limits of what you can do, like precisely a 39.6 percent top rate (when he could have proposed 40 percent or 50 percent).
But in other ways, Bivens noted, “It’s a far more ambitious plan than anything even the Obama aspirational budgets,” the yearly President’s Budget released by the White House, proposed.
Which tells us that the “moderate” position on taxes, as on other issues, has moved significantly to the left.
You can make a direct comparison with health care. When Biden was vice president, single-payer health care was considered something of a fringe idea in the Democratic Party, advocated by people like Sanders but not taken too seriously. Then it moved to the heart of the party’s debate on health care, the result of which was that a robust public option became the moderate position.
Today, many on the left view a public option as a sellout, even though the one advocated by (among others) Biden is far more progressive than the Affordable Care Act, potentially giving tens of millions of Americans the protection of government health insurance and making single-payer in the future far more likely.
This tax plan is very similar. In fact, it’s a combination of proposals that Obama never even considered and things that at various times he put in budget proposals but knew would never find their way into law because Republicans controlled one or both houses of Congress.
So ideas such as equalizing taxes between wage and investment income (which I’ve been shouting about for years) or eliminating the stepped-up basis loophole were suggested by Obama, but without any illusions that they would become law. Now they’re in Biden’s campaign tax plan, which will necessarily be the starting point for legislation if he becomes president. That brings them a giant step closer to reality.
The entire atmosphere has changed. I also spoke to Jared Bernstein, who was Biden’s chief economic adviser when he was vice president. (Bernstein did not have any role in crafting this plan.) He argued that in part because of a reaction to increasing regressive Republican tax policies and in part because of the prominence of more ambitious proposals such as a wealth tax, ideas about what Democrats should or can do have shifted to the left.
So a reasonably progressive plan like this one would be able to pass through Congress if Democrats took control, which means winning the support of the most conservative Democratic senators, like Joe Manchin or Kyrsten Sinema.
“When I go through this list,” Bernstein said, “I see a lot of stuff that I think the marginal Democratic senator would be okay with.”
The “moderate” position on taxes among Democrats has now become not only increasing them on the wealthy, but also doing in ways that could make the tax system substantially more fair and provide significant funding for social programs — ways that were considered pipe dreams just a few years ago. Even if you think Biden’s plan doesn’t go far enough, that’s reason to be pleased.