This … doesn’t seem like the worst thing in the world. The kink in the tax progressivity curve that made rates rise quickly for the HENRYs has been pushed up the income distribution to taxpayers less likely to feel strapped, and may now move a little farther in that direction. HENRYs still pay lots of taxes—21% of the federal income tax total in 2018, from just 4.4% of the taxpayers—and will continue to do so even if the SALT cap is repealed. Still, the Republicans’ commitment to cutting federal income taxes and the Democrats’ new commitment to never raising them for those making less than $400,000 together seem to be putting a crimp in the U.S. government’s ability to raise revenue. That hasn’t mattered much over the past decade because interest rates have been so low, but at some point in the future it might. The HENRYs, who will be lucrative targets in any revenue-raising effort, may want to set aside part of their windfall for that rainy day.
Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”