Khimm has details on their new tax plan:
Under [Maryland Congressman Chris] Van Hollen’s new proposal, working Americans earning up to $100,000 would receive a $1,000 tax credit per individual; working couples earning up to $200,000 could receive up to a $2,000 tax credit. The plan also increases tax credits for child-care expenses, creates a new credit that rewards workers who save for retirement, and reduces the so-called “marriage penalty” for dual-income families.
The $1.2 trillion plan would be paid for through new limits on tax deductions for the top 1% of American households, as well as a 0.1% fee on a broad array of financial transactions. In 2015, the top 1% will have $518,000 or more in adjusted gross income, according to the Tax Policy Center.
Kilgore raises an eyebrow:
[W]e haven’t seen the whole package. But suffice it to say it’s one of the more frankly redistributive proposals coming from anywhere other than the Progressive Caucus in a good while, and the central prominence of the financial transaction tax makes it a direct shot at Wall Street.
Russell Berman admits that, with “the GOP firmly in control of Congress for the next two years, Van Hollen’s proposal has no chance of going anywhere immediately”:
But it lays down a marker for Republicans, who have talked increasingly about wanting to move away from their budget-slashing reputation and toward policies that can win over the prized middle class. And it can also be seen as an offering to Hillary Clinton, who will need a platform to run on in 2016 as well as a way of attracting the liberals who are disappointed that the more populist Warren won’t challenge her. So while it won’t become law, Van Hollen’s plan is likely to help shape the economic debate both in Congress and on the campaign trail.
Sean McElwee and Lenore Palladino focus on the proposed tax on financial transactions:
The small FTT in this bill—which also includes provisions to boost stagnant wages and close lucrative tax loopholes—wouldn’t burden longer-term investors. The tax is applied to every transaction—the sale and purchase of a stock, bond, or other financial instrument—so as long as the investor holds the investment for a decent period of time, the tax is a tiny percentage of their overall portfolio and won’t drastically alter their trading behavior. It’s the high-frequency traders who have fought this tax tooth and nail, and who will gear up to fight it now, because if you trade multiple times a millisecond then your tax burden will be higher.
Jared Bernstein stands up and applauds:
Whether you like [Van Hollen’s] approach here in attacking inequality through the tax code or favor ideas that target market outcomes, what’s so very notable here is that a senior member of the Democrat’s caucus is trying to do something about the relentless inequality that’s beset the middle class and poor for decades.
But Ponnuru brushes off the plan:
[T]he proposal sounds entirely redistributive. Much of it also seems likely to be ineffective. The tax incentive to boost wages does little to combat the powerful forces that have suppressed wage growth in recent years (such as rising health-care costs). The new higher-education policies mostly funnel more money to a system that does a poor job of meeting the needs of middle- and lower-income students.
The elements of the Democratic tax proposal would almost certainly poll well, but Republicans have an obvious counter to it. Senators Mike Lee and Marco Rubio have been working on a plan that cuts taxes on business investment while increasing the tax credit for children. Unlike the Democratic proposal, it seeks to help the economy grow rather than just milk it. And increasing the tax credit for children would benefit a broader range of parents, and give them more freedom over how to spend their money, than increasing the tax credit for child care.
Waldman, on the other hand, thinks the GOP is at a disadvantage:
If we look back at the recent history of presidential campaigns, we see that Republicans win the argument on the economy under three conditions. The first is when there’s a Democrat in the White House and the economy is terrible, as it was in 1980. The second is when there’s a Republican in the White House and the economy is doing well, as it was in 1984 or 1988. And the third is when the economy is doing so-so, but the election turns on an entirely different set of issues, as in 2004 — in other words, when there really isn’t much of a discussion on the economy.
The 2016 election doesn’t look (at the moment anyway) like any of those three. Unless there’s a dramatic change, the economy will be doing well in broad terms like growth and job creation, but voters will want to hear what the parties are going to propose to improve wages, working conditions, and the fortunes of the middle class and those struggling to join it. Winning that argument will be an enormously difficult task for the GOP, and they aren’t off to a promising start.