How Vance is Helping Democrats on Tax Policy

How Vance Is Helping Democrats on Tax Policy

Today for the Washington Monthly, I urged the presumptive Democratic presidential nominee, Vice President Kamala Harris, to support tying the corporate tax rate to fair pay for their workers.

The idea has been promoted in the Monthly previously—see here and here. The cities of Portland, Oregon and San Francisco, California already have such policies in place, slapping tax surcharges on companies with CEO compensation that’s at least 100 times bigger than that of their median workers.

My additional suggestion is to tie this concept (perhaps using a different CEO-to-worker pay ratio threshold) either to the corporate tax rate, which Donald Trump reduced from 35 to 21 percent in his 2017 tax law, or to the taxes on stack buybacks that were part of the Joe Biden’s Inflation Reduction Act.

Many of the provisions in Trump’s law sunset in 2025, making tax reform the first order of business for the next president.

The lower corporate tax rate does not automatically sunset; that’s permanent. Democrats are generally eager to raise it, but Harris has not said what exactly she will propose.

Partly thanks to Trump’s new running mate, Senator JD Vance, I argue that it’s even easier for Harris to use the corporate tax policy to encourage fairer pay.

But first, here’s what’s leading the Washington Monthly website:

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How Harris Can Outfox Trump (and Vance) on Taxes: My argument for Harris to support a higher tax rate on corporations who pay CEOs absurdly more than their workers. Click here for the full story.

As Election Day Approaches, Don’t Forget About the K Street Wolves: Anita Jain, editorial director for the Open Markets Institute, reviews the new book The Wolves of K Street: The Secret History of How Big Money Took Over Big Government by Brody and Luke Mullins. Click here for the full story.

A New Look at the Feminist Earthquake: Sarah Bhatia, an independent museum consultant, reviews the new book The Movement: How Women’s Liberation Transformed America, 1963-1973 by Clara Bingham. Click here for the full story.

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In his crusade for higher taxes on childless adults, three years ago Vance said on a podcast, “Let’s tax the things that are bad and not tax the things that are good.” For him, having children is good, and not having children is bad.

The traditional conservatives on The Wall Street Journal editorial board are horrified by Vance’s logic, writing in an editorial last week, “It’s bad policy to use the tax code for social policy … Conservatives used to believe in a neutral tax code that didn’t play favorites, but Mr. Vance is suggesting the code should be used as a political and cultural weapon against people who don’t share his values.”

The operative phrase in that statement is “used to.”

Now, in Trump’s Republican Party and MAGAfied conservative movement, all government levers are political and cultural weapons.

The Journal also argued that Vance’s position is “bad politics,” as “‘Raise taxes on the childless’ isn’t a winning campaign slogan.”

Agreed, but it’s not the case that all uses of tax policy to promote social goods are political losers. Vance’s problem is that a lot of potential voters, about 101 million, don’t have children.

Most voters do like higher wages. So a tax policy designed to promote higher wages is arguably the opposite of politically toxic.

And to further make the case for a tax policy that promotes higher wages, or any other reasonable policy goal, Democrats can quote Vance: “Let’s tax the things that are bad and not tax the things that are good.”

Republicans like Trump and Vance have strayed so far from traditional conservatism in their pursuit of political power they increasingly that say things that validate liberal concepts, such as voicing support for Social Security and government spending on infrastructure.

Now Vance has done so on tax policy. Democrats should take advantage.

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Best,

Bill Scher, Washington Monthly politics editor

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