I live on a quiet street.
There’s a pothole in the road outside my gate. Our neighbor’s mutt likes to wander over and lie in it. We all call him ‘Pothole Dog’. I’ve lived here two years and that hole’s been here longer. It looks to have set down roots.
President Joe Biden has an infrastructure plan – not to fix my specific street, but all of its American equivalents. President Obama had one, too, as did President Trump. America’s a big, booming country: we need the best roads, the soundest bridges, the cleanest water for coffee and the kids’ pools, along with zippy WiFi and crisp cellphone signals. All of those things – stuff that wears out.
Despite best intentions, the last two chief execs failed to make headway. Why? A rather complex answer can be distilled into a few words: the problem is complicated, and political.
The federal government owns surprisingly little infrastructure – just six percent. States and localities own a lot, like bridges and roads; significant holdings are private, including digital delivery systems. If Washington wants anything, they must corral hundreds of stakeholders. Pity the poor White House.
Still, Joe will give it a go. Hopefully, he’ll make good use of the lessons his less-than-successful predecessors learned the hard way. Right now, the president is speaking in numbers: one trillion, two trillion dollars. It sounds encouraging, like it might make a dent. A moment of consideration turns me contrary: the amount means little if it builds bridges to nowhere or funds interminable studies.
How will Biden’s plan transform our reality into rapid commuting, clean air for breathing and reliable, universal access to my blog? Public support for infrastructure repairs is poll-rated mighty, but Joe will need to sell it. A high-terror price tag may attract, then repel; only plain-sense workability will convince us voters. Washington ain’t so good at this skill today.
Clear passage through Congress, despite the Democrats’ control of the House and effective majority in the Senate, is far from assured. Look what just happened with the minimum-wage proposal: it’s bedrock for Democrats, yet the road got rocky and the idea’s on hold. What could happen over a $2 trillion boondoggle? See, one simple word there – it’s that easy to disrupt.
Yet in the Capitol today, it’s full steam ahead, doubters like me be darned. Senator Elizabeth Warren, D-Massachusetts – once a Republican, I wonder what happened? – and a few allies have their eyes on the Biden plan’s price tag. Someone has to pay, after all. Guess who’s in the firing line?
Title: The Ultra-Millionaire Tax Act. Senator Warren says it will garner $3 trillion over 10 years, “without raising taxes on the 99.95% of American households” whose net worth is under $50 million. Oh, how you’ll rue that one dollar that tops the fifty mil.
The Act proposes a 2% annual tax on households and trusts worth $50 million to $1 billion – I’m paraphrasing her words for accuracy, so don’t sue. It would also create a 1% annual surtax on households and trusts worth north of $1 billion, meaning a combined 3% overall tax hike for these targets.
Senator Warren cites fairness as her inspiration. “The ultra-rich and powerful have rigged the rules in their favor,” says the senator. Yes, that’s what they do. You’ve read the Old Testament, yes? “A wealth tax is popular among voters,” Warren said in a statement. Of course we’d say that: if we’ve no choice but a tax rise – sure, tax anyone richer than me. Nothing to see here.
I note that Senator Warren has made a name in Congress for her tax-the-rich proposals, which echo down its neoclassical halls. They don’t get passed, as a rule. This may reflect that rigging – or the power of empirical persuasion. I say taxes are unpopular and really hard to hike. Again, nothing to see here.
But it sure feels good to talk about it, taxing the rich. I’ve codified the matter: the 10k rule, I call it. Ordinary citizen-taxpayer-earners of my acquaintance think the rich should be hit. How do we define these moneybags? Answer’s easy-peasy: anyone who makes more than I do, plus $10,000. Why, that’s perfectly reasonable and moral, they reason.
When that 10k boost is accomplished in their lives, as often occurs when careers advance, why, a further 10k gain still seems reasonable. Just a taste more – for my kids, they say. Just once I’d like to hear, ‘for booze and a Ferrari’.
The race goes on and there isn’t a finish. Guess what: I have a friend, a particular angel to everyone, who’s worth ten million dollars. He worries, always: how will I provide for my family? How will I pay if my son goes to Oxford; what if my wife wants a – what, a moonrock? So he strives on, earning more, ever penny-pinching, I kid you not. Pothole Dog, who does nothing but grin (and dodge scooters) would find it houndingly funny.
‘Tax the rich, who aren’t me’ thinking is national policy. Votes are registered, candidates elected on the idea of taxing – somebody else. I suppose billionaires won’t pass away, flee to other shores, sit down and cry among their Fabergé eggs if their tax bill inches up – though I, simplest of mathematicians, note that three percent of $1 billion is $30,000,000. Who knows what they’ll do.
Senator Warren’s tax hike proposal may pass – a first time for everything – but it’s doubtful. These crazy days, though, who knows? This is a good time to contact your congressmen and express your views – on infrastructure spending, taxes, the Road Dog Protection Act I’m working on – anything topical. Whether you’re ‘for’ or ‘against’, I’m not bothered. We’re all about the free speech around here.
One more thing: if it feels like Senator Warren is peeking at you personally from behind your privet hedge, a tax-mitigation talk with your advisory team might be timely and sensible, too.