By Robert Stewart
America, the richest country in the world, faces an infrastructure crisis. Years of neglect have produced unsafe roads, bridges, and public buildings. Ancient leaky water systems threaten human and environmental health. This summer, a bridge over a highway collapsed in our nation’s capital. The Digital Divide leaves many rural communities without access to broadband, a necessity in the 21st century economy, made clear during the pandemic as more and more commerce and education migrated online.
Though the crisis is nationwide, the impact is uneven. Crumbling infrastructure is both a marker and cause of economically disadvantaged neighborhoods, and communities of color endure more inadequate infrastructure than does white America.
Yet the crisis is broader, since infrastructure is not only built of brick and mortar—so called “hard infrastructure.” Our society is also held together and undergirded by the “caring economy” (healthcare, childcare, eldercare) and other vital services like education, housing, climate-change response, as well as by income-supporting tax credits. Some call that “soft infrastructure,” even though the support it provides is just as solid and necessary as an iron bridge.
Recently, the U.S. Senate passed a $1 trillion bill that addresses the dire “hard infrastructure” needs of our country—but does nothing to improve “soft infrastructure.” Thankfully, Senate Democrats have also passed a landmark budget resolution that would greenlight the budget reconciliation process and allow up to $3.5 trillion of “soft infrastructure” investments over the next 10 years.
Budget reconciliation is an effective way the Democrats can advance their goal of creating a more equitable economy. This strategy is especially important given the Democrats’ slim majority and polarized partisan political climate in the Senate. With a 50-50 split in the Senate and Vice-President Harris holding the tie-breaking vote, reconciliation is a procedure that will allow the Democrats to pass legislation on budgetary items such as taxes, spending, and the debt limit while bypassing minority obstruction via the filibuster.
The Senate Democrats’ $3.5 trillion spending plan closely aligns with President Biden’s “Build Back Better Plan” and includes very popular “soft” infrastructure proposals like expansions to Medicare, funding to combat climate change, tuition-free community college, national paid family leave, extended child tax credits for working families, and other critical social investments. Subsequently, the House did pass the $3.5 trillion budget resolution and a committment was made by House leaders to vote on the bipartisan infrastructure bill by September 27.
The White House has endorsed both the bipartisan infrastructure bill and the Democrats’ budget resolution—the latter would be the largest spending bill in Congressional history.
Most people agree with the need for these investments—where they disagree is over how to pay for them. Republicans refused to raise taxes on the rich and corporations to pay for the bipartisan infrastructure bill. The financing gimmicks they used instead are widely seen as suspect.
Public Citizen and other advocacy groups are calling on Congress not to make the same mistake with the $3.5 trillion reconciliation bill. We should use higher taxes on the wealthy and corporations not only to raise the revenue needed, but also use this moment to create a fairer tax code and a more equitable economy at large. When fighting for a just recovery from the pandemic recession, we must remember the government’s inadequate response to the Financial Crisis of 2008 —in which the big banks who caused the crisis were bailed out but there was little to no relief for the millions of middle- and working- class Americans who were devastated as a result of the banks’ greedy and fraudulent activity. It’s past time that our government prioritize the needs of working families, not just the 1%.
While President Biden and several Democratic members of Congress have over the past year proposed a variety of money-raising reforms to the tax code, the revenue raisers of the $3.5 trillion package have yet to be finalized. While the details may still be lacking, the problem to be solved is clear: for far too long, corporations and the wealthy have gotten away with not paying their fair share of taxes, leaving the brunt of taxes to be paid by ordinary Americans and starving vital public services of revenue.
Among the progressive tax policy changes under discussion are: closing loopholes that U.S.-based multinational entities use to gain preferential tax treatment of their international income; closing capital gains’ loopholes that help wealthy families hoard their wealth; increasing the top tax rate for wealthy individuals; raising the corporate income tax rate; and eliminating tax breaks for harmful environmental business practices such as the production of fossil fuels. No one making less than $400,000 would pay more tax under these Democratic plans.
In addition to instituting fairer taxes, it is vital that the Democrats include funding for IRS enforcement as a revenue raiser that would ensure corporations and the wealthy pay what they already owe for much-needed investments in a fairer economy. Rich tax cheats and corporations cost us hundreds of billions of dollars a year in illegally evaded taxes. Properly funding the IRS would yield huge pay offs as University of Pennsylvania law professor Natasha Sarin and former Secretary of the Treasury Larry Summers estimate that increasing the IRS budget over the next 10 years by $100 billion would bring in as much as $1.15 trillion over that same period.
It is refreshing to see tax fairness take center stage in a policy debate. It makes sense, since polling suggests that tax fairness is what Americans want and is popular across ideological lines. All Americans deserve to live in a country with clean energy, universal childcare, affordable healthcare, quality education, fair housing, policies to alleviate poverty, and otherwise receive a fair shot in life regardless of background. Making sure that corporations and the wealthy pay their fair share of taxes is one of the most important ways we can help create an economy that works for all and secure much needed investments in both “hard” and “soft” infrastructure. We should all join the fight to make sure revenue raisers from tax increases on the wealthy and corporations are included in the final budget bill!