Fresh off their sweeping midterm victory, Democrats are reviving proposals to raise taxes on the wealthy, and they don’t much care if President Donald Trump vetoes them.
Ideas for a federal wealth tax and other steep tax hikes on the rich have been dormant for years, but Politico reported they're now “roaring back to life on Capitol Hill,” even as Trump promises to be “Mr. Veto.”
Sen. Chris Van Hollen (D-MD), a possible 2028 presidential contender, said Democrats should welcome a veto fight with a weakened Trump.
“It is essential that we show the American people where we stand,” Van Hollen said. “If Trump vetoes it, it will just show people that he’s on the side of billionaires.”
Democrats will take decisive majorities in both chambers in January, with far more room for error than Republicans have had over the past two years. Social Security’s looming insolvency, a $2 trillion deficit and pricey priorities like restoring health insurance subsidies will all have lawmakers hunting for revenue.
Senior Democrats are already rolling out ideas. Sen. Chuck Schumer (D-NY), expected to become majority leader, recently proposed quadrupling a tax on stock buybacks. Sen. Ron Wyden (D-OR), set to retake the Finance Committee gavel, wants to restrict wealthy investors’ use of derivatives. Rep. Richard Neal (D-MA), the likely Ways and Means chair, wants to limit how much the rich can stash in retirement accounts.
Van Hollen has also proposed surtaxes on people earning more than $1 million, and nearly half the Senate Democratic caucus has endorsed the idea, including moderates like Sens. Mark Kelly (D-AZ) and Angus King (I-ME).
Democrats could get political cover from across the aisle. Sen. Bernie Moreno (R-OH) and Rep. Tom Cole (R-OK) have recently backed higher taxes to help fund Social Security, though both stop well short of supporting a wealth tax.
A wealth tax itself faces a tougher road, Politico reported. Some Democrats worry the Supreme Court would strike it down as an unconstitutional “direct tax,” and California voters appear to have rejected a state version on Tuesday.
It’s also unclear how the new red-state Democrats from places like South Carolina, Kansas and Iowa will vote on these proposals. “I don’t think we know yet,” said former Senate Democratic tax aide Anna Taylor.
Alex Jacquez of the Groundwork Collaborative, which advocates for higher taxes on the rich, predicted that the incoming caucus will be friendlier to the idea than it was in the Biden years.
“People are angry, and they are directing that anger at big corporations and the wealthy,” Jacquez said. “When it comes to public opinion, this is the best moment that you could have to raise taxes on the wealthy.”