Voting on the $3.5trn social spending bill may take place in the coming weeks, possibly wrapped into a package that also raises the debt ceiling
The $3.5trn social spending bill wending its way through Congress proposes to change this. Passage would require a party-line vote in the Senate, with all Democrats supporting it . Its provisions would touch many facets of American life: monthly payments to parents with children, funding for universal pre-kindergarten and incentives for power companies to use renewable energy. Just as significant is its potential impact on America’s tax system.
Yet headline rates are not the same as what people actually pay. A series of deductions, from mortgage interest to local taxes, let the wealthy cut their bills. The ultra-rich have even more room to manoeuvre. Emmanuel Saez and Gabriel Zucman of the University of California, Berkeley have found that the 400 wealthiest Americans face lower tax rates than the middle class, because they collect much of their income as corporations.
The most stinging criticism from the left is that the bill will fail to close all those loopholes. As it stands, someone who strikes it rich on properties or stocks can put those profits beyond the reach of the Internal Revenue Service so long as they hold on to their assets. If their heirs cash out, the basis for their capital-gains level would be the value of the assets at the time of inheritance. The fix for this is relatively simple: tax capital gains at death.
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