In A Big Win for Fairness, Democratic Platform Adopts Biden-Harris Tax Agenda
Their inclusion is a clear signal Democrats have heard the popular call for the super-rich and corporate giants to start paying their fair share of taxes.
In a big victory for tax fairness, almost all the progressive tax reforms proposed by the Biden-Harris administration over the past nearly four years have been included in the Democratic Party’s 2024 platform. Their inclusion in this set of key campaign promises is a clear signal Democrats have heard the popular call for the super-rich and corporate giants to start paying their fair share of taxes.
The breadth and depth of the proposed reforms is remarkable, stretching from better taxing billionaires, to raising the corporate tax rate, to strengthening Social Security by making the highest earners pay a fairer share into the system. According to an ATF analysis based mostly on Treasury scores of those earlier budget proposals, the Democratic platform’s tax reforms would raise nearly $6 trillion over 10 years—without raising a penny of direct tax on any family making less than $400,000 a year.
That’s six trillion dollars that could help fund the working-family agenda that Vice President Harris outlined last week, which includes substantial financial help for new homebuyers and a more generous Child Tax Credit with a new emphasis on newborns. The increased tax revenue could also be used to fund other public investments proposed by the Biden-Harris administration over the years, including lower healthcare premiums, free preschool, and a paid family-and-medical-leave program. Some of it could also be used to lower public debt.
The Democratic platform confirms that aggressive tax reforms which—despite being common sense and widely popular—would have been considered “radical” just a few years ago are now mainstream. The reason is that more and more Americans have realized an upside down tax system is a principal reason they often struggle to get by while rich households and big corporations soar to ever greater wealth and power.
Take the taxation of billionaires, for instance—or rather, the relative lack of it. The main source of income for billionaires and other hyper-wealthy people is different from that of the vast majority of Americans who mostly rely on wages. Our tax system as currently constructed is not equipped to tax that special type of income, known as “unrealized capital gains.” These are the gains made from investments not yet sold, but which the super-rich can live off just the same by putting them up as collateral against low-cost loans.
The Democratic platform fixes the problem of under- and even untaxed billionaires by adopting the Biden-Harris Billionaire Minimum Income Tax (BMIT). Under that plan, households worth over $100 million would pay tax each year on the growth in their investment portfolio, whether or not they sold the winning investments. This new tax would only apply to the wealthiest 0.02% of American households, yet would raise more than $500 billion over ten years.
Equally maddening as the concept of tax-free billionaires is that of big corporations paying little or nothing in taxes. Hundreds of the nation’s largest and most profitable corporations have, over recent years, paid an average tax rate of around 14%, which is a third less than the current designated federal rate of 21%. Dozens have paid less than 10%—some have paid nothing at all. The reason is that despite fat profits, corporations can use loopholes to whittle down their tax bills.
One solution is to close those loopholes (an idea the Biden-Harris team has also backed), but another simpler step is to raise the official rate. The higher the official rate, the higher the “effective” rate corporations actually pay. The Democratic platform, echoing the proposal of the Biden-Harris administration, calls for the corporate tax rate to be lifted to 28% (which would still be lower than it was just seven years ago). That one reform alone would raise more than $1.3 trillion over a decade.
Billionaires and the overwhelmingly wealthy shareowners of corporations don’t rely much on Social Security, but for the majority of retirees it is the single largest source of income. That’s why the system’s long-term strength is so important not only to the families receiving benefits but to the health of our society as a whole. Many Americans would be surprised to learn that the highest-income employees pay a lower share of their salary in Social Security taxes than do average workers—and that the share shrinks the higher the salary goes. That’s because those high-earners pay nothing in Social Security taxes on wages exceeding a cap that in 2024 stands at around $170,000.
The Democratic platform would end this injustice and raise $1.34 trillion in extra tax revenue to bolster Social Security by removing the cap on work income over $400,000.
These are just three examples. Among other platform tax reforms: ending for millionaires the nearly half-off tax discount on certain investment income; closing the loophole that allows wealthy heirs to avoid tax on a lifetime’s worth of capital gains; and ensuring rich business owners can no longer dodge healthcare taxes.
These proposed reforms are all the more noteworthy when compared with the tax plans outlined (however briefly) in the corresponding Republican platform. That document’s single biggest tax item is the proposed permanent extension of the parts of the 2017 Trump-GOP tax law due to expire at the end of next year. That extension would lose nearly $5 trillion in revenue while mostly benefitting the wealthiest Americans.
On the issue of taxes, the contrast between the two platforms could not be greater.