Taxing the rich becomes hot topic of debate for 2020 hopefuls

A debate over how hard to tax the rich is taking center stage in the early days of the 2020 presidential race.

Likely candidates who are more to the left are leaning heavily on messaging that says wealthy Americans need to be taxed significantly more, and they’re backing that up with proposals to make their mark on the issue.

{mosads}Meanwhile, billionaires who are considering entering the race are pushing back on some of the latest calls to boost taxes on the wealthiest U.S. residents.

Democratic strategists say that arguments in favor of major tax increases for the rich will win over voters. They also predict that candidates who have yet to offer such proposals are likely to do so as the race heats up.

“Presidential elections are about the candidates’ values, and tax policy may sound wonky, but it’s become a tangible way to reflect what you value,” said Jesse Ferguson, a spokesman for Hillary Clinton’s 2016 campaign who later worked for groups opposed to President Trump’s 2017 tax law.

Ferguson added that Democrats’ policy proposals are showing how they value work more than wealth, which “may not be a winner on Wall Street, but it’s definitely a winner on Main Street.”

The party’s presidential primary field is expected to be crowded, and many candidates will be battling for progressive voters who are troubled by income and wealth inequality.

{mossecondads}Sen. Elizabeth Warren (D-Mass.), who has announced an exploratory committee for president, recently announced a proposal for an annual tax on the wealth of households with a net worth above $50 million. Her plan would focus on accumulated wealth, as opposed to income.

Sen. Bernie Sanders (I-Vt.), who is considered likely to enter the Democratic primary field, introduced legislation on Thursday that would significantly expand the estate tax. He offered a similar proposal during his 2016 presidential campaign, but the new version calls for an even higher rate on the biggest estates, taxing the value of estates that exceed $1 billion at a rate of 77 percent, up from 65 percent in his earlier plan.

The rollouts from Warren and Sanders come after freshman Rep. Alexandria Ocasio-Cortez (D-N.Y.), a rising star on the left but who is too young to run for president in 2020, sparked a national debate by floating a 70-percent marginal tax rate for individuals with annual income over $10 million.

The proposals from potential White House hopefuls also come a little more than a year after Trump signed tax-cut legislation that did not receive any votes from congressional Democrats. The legislation also didn’t garner widespread public support, with polls showing many voters have agreed with Democratic lawmakers that the law benefits the wealthy and corporations more than the middle class.

Maura Quint — executive director of Tax March, which opposes the 2017 GOP law — said the legislative overhaul prompted the public to become more vocal about calling for wealthy people to pay more in taxes.

“Now we’re seeing politicians pay attention to that, and we’re seeing politicians find the strength to speak to these issues because they recognize that Americans care and demand that they speak on these issues,” she said.

Public opinion polls have found that Democrats, as well as a significant number of independents and Republicans, think the wealthy aren’t paying enough in taxes. As a result, Democrats argue that presidential candidates will be rewarded in both the primary and general election if they push for raising taxes on the rich.

“This is one of the few issues that can energize the base and persuade the swings,” said Democratic pollster Celinda Lake.

She added that proposals to tax the wealthy can bolster candidates’ progressive credentials while also providing an economic argument for boosting federal spending in areas like health care and education because those increased costs can be offset by revenue from taxing the rich.

But not everyone is a fan of the new proposals. Some of those plans have received public pushback from billionaires who are signaling they might enter the presidential race.

Former New York City Mayor Michael Bloomberg, who may run as a Democrat, criticized Warren’s proposal, questioning its constitutionality and saying the U.S. “shouldn’t be embarrassed” by its capitalist system.

Former Starbucks CEO Howard Schultz, who has said he’s seriously considering running for president as an independent, called Warren’s proposal “ridiculous” in a recent National Public Radio interview. He also told CNBC that Ocasio-Cortez’s 70 percent tax rate proposal was a reason why he won’t be running for president as a Democrat.

Warren fired back at Bloomberg and Schultz on Twitter, saying billionaires like them “want to keep a rigged system in place that benefits only them and their buddies.”

The public backlash against Bloomberg and Schultz led some strategists to say the billionaires won’t for president, or will have a hard time gaining traction if they do.

Democratic strategist Brad Bannon said Schultz “saw the handwriting on the wall” and decided not to run as a Democrat because of his stances on economic issues, and that Bloomberg is “going to have to face the same reality.”

A number of Democratic candidates have yet to offer specific proposals to significantly boost taxes on the wealthy, or have primarily focused their tax priorities elsewhere.

Sen. Kamala Harris (D-Calif.) has emphasized cutting taxes for the middle class, saying in a CNN town hall Monday that the first thing she would do as president is try to enact her legislation that would create a tax credit of up to $6,000 for low- and middle-income families.

She envisions paying for her proposal in part by rolling back aspects of Trump’s tax law that benefit high earners, saying during the town hall that those people “need to pay more taxes.” A Harris campaign aide said there could be more tax proposals from the senator down the line.

Some experts have suggested that policy outlines focusing on higher taxes for the rich will have more appeal to voters than proposals that call for cutting taxes on those with lower incomes.

“Generally, public opinion is that people are more unhappy that rich people and corporations aren’t paying their fair share than they are that they are paying too much,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.

Given the popular support for making rich people pay more in taxes, and the desire for Democrats to find ways to pay for their spending priorities, more candidates are likely to come out with tax-the-rich proposals as the 2020 race picks up speed.

“I think this will be an unavoidable issue for the election,” said Quint.