In his first 50 or so days in office, President Biden barely mentioned the words “tax increase.” Then on or about on St. Patrick’s Day, he dropped the bomb.

That immediately sparked a frenzy of proposals from the likes of Senators Bernie Sanders and Elizabeth Warren, who view raising taxes on the wealthy as a principal reason for their existence in government. But how likely is the massive tax increase some Democrats envision?

The odds are looking less and less likely. There is a 50-50 split in the Senate, and one of the few issues Republicans can agree on is stopping virtually any tax increase.

Convincing Democrats to agree on anything is like herding cats. A handful of moderates are open to small tax increases, like raising the corporate income tax rate from 21% to 25%. President Biden has already indicated he is willing to compromise on his proposed 28% corporate tax rate.

Then there is the issue of removing the cap on state and local tax deductions. Some Democrats say they won’t vote for any bill that doesn’t raise or abolish the cap. Others on the far left claim it would be a giveaway to the rich.

That is one of only several impediments to big increases in rates. After 36 years in the Senate, the president knows better than most people that little is possible in Congress without compromise.

So it seems far more likely that taxes will go up at the margins. The elimination of carried interest for hedge funds and private equity firms might actually happen. Personal income and corporate tax rates could inch up.

But the fiscal and monetary stimulus created as a response to the pandemic increased federal debt by at least 20%, depending on how one calculates it. If the tax increases turn out to be as minimal as it appears, the debt problem won’t be solved.

A better solution might be an elimination and streamlining of deductions. The notion that the rich don’t pay any taxes isn’t accurate.

Some of them don’t. I’ve heard a billionaire who owns an asset management company grouse about the fact that he pays more than 50% of his income in taxes, while Sen. Mitt Romney back in 2011 paid under 16% of his income in taxes.

The asset manager lives in California, and that’s his choice. But a fairer system might go some ways to reducing our debt. Of equal importance, it might reduce the widespread bitterness, resentment and sense of a rigged game that poisons our national discourse. 

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