May 5, 2021 - Douglas Myser

Tax hike bets on richer voters. President Joe Biden is asking congressional Democrats to vote for a tax increase that will test a long held liberal article of faith: that many wealthy Democrats won't mind paying more in taxes if they can be convinced the money would lead to greater prosperity for everyone. Democrats now represent 65% of taxpayers with a household income of $500,000 or more, according to pre-pandemic Internal Revenue Service statistics. And as Congress begins considering Biden's $2.25 trillion spending and tax proposal, Democrats are being explicit with their constituents about how much it'll cost them--and how much they say it will begin to address issues like income inequality. It's put cultural issues ahead of traditional pocketbook issues in voters minds. Tax hike bets on richer voters.

"Many of my constituents would be wiling to pay the bill if what they're paying for is visible, tangible and useful to them," said Tom Malinowski, a Democrat who represents a wealthy New Jersey district. Former President Donald Trump accelerated the Republican Party's transformation from the well heeled party of big business to a more populist, working class profile.  In 1993, the last time a president asked Congress to vote in a significant tax hike, the typical congressional district represented by a Republican was 14% richer than the typical Democratic district, according to  household income data from the Census Bureau. By 2020, those districts were 13% poorer. An anti-tax ethos remains part of the party's DNA, even as fewer Republican voters would pay the tax increases directly. Nearly three quarters of 74% of taxpayers in Republican districts had a household taxable income of less than $100,000, according to the IRS statistics, and wouldn't see their income tax rate rise under Biden's plan.

Republican members of Congress are more dependent than Democrats, though, on PACs that represent corporate interests. In 2016, House Republicans received about twice the donations that Democrats did from corporate political action committees. In 202, business interests PACs gave $181 million to Republicans and $135 million to Democrats.