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EDITORIAL: Democratic hypocrisy on the rich and taxes

Congressional Democrats can’t decide whether to soak the rich or hand them an immense tax break. In a tribute to policy incoherence, they’ve settled on both.

The House on Friday approved the $1.2 infrastructure bill after decoupling it from an even larger entitlement measure — the reconciliation legislation — pursued by progressives and the president. The content of the latter remains fluid and its fate remains in doubt, particularly in the Senate.

In order to get moderates on board for the massive social spending bonanza, Speaker Nancy Pelosi has revived an old favorite. Last week she discreetly made sure that the reconciliation bill includes a gift to wealthy residents of high-tax blue states in the form of a healthy increase in the federal write-off for state and local taxes — known as the SALT deduction. Democrats have been wailing about the provision ever since Republicans in 2017 imposed a $10,000 cap on such deductions, which made it more difficult for big-spending politicians in California, New York, Illinois and other liberal enclaves to disguise their imprudent fiscal decisions. Ms. Pelosi now seeks to bump the cap to $72,500.

This would overwhelmingly benefit high earners. The Wall Street Journal reports that a Tax Foundation model calculates nearly 88 percent of taxpayers making more than $1 million would get a tax cut under the Democratic plan, with filers earning beyond $250,000 getting 70 percent of the savings.

This from a party whose faithful regularly drone on about the rich not paying their “fair share” and only a week ago were floating the idea of taxing billionaire capital gains before they’re even realized. But the hypocrisy runs even deeper.

In addition to the SALT giveaway, Democrats would hand tax subsidies worth up to $12,500 to well-off Americans who buy electric vehicles. Under the current bill, the credit won’t phase out until individual earners hit $250,000 in annual income, or $500,000 for married joint filers. There’s also a tax credit for electric bikes — electric bikes! — including high-end models that run as much as $4,000.

Meanwhile, Democrats claim to have this $1.9 billion reconciliation bill “paid for” with higher taxes on corporations and the rich. That would be much easier, of course, if they weren’t taking away with one hand while giving back with the other through SALT relief, EV handouts and other subsidies. But the idea that this bill pays for itself is accounting fiction: In a master stroke of fiscal gimmickry, every new entitlement in the measure is designed to sunset — which will never happen. Whatever final number Democrats pin on this donkey, expect the true cost to be triple.

The infrastructure bill may be stuffed with pork, but the reconciliation spending barrage is a dangerous house of cards.

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