Democrats may blow campaign promises and give the rich a big tax cut in Biden spending bill: 'We couldn't be giving Republicans a better gift'

• Democrats want to roll back a Trump-era tax measure that overwhelmingly benefits higher-earners.
• Yet it means the rich could get a much larger tax cut than the poor — the opposite of what Democrats said they wanted.

President Joe Biden could get the bulk of his economic agenda passed by New Year's Eve, but some Democrats are worrying it could contain a measure that contradicts their promises: It could give more tax cuts to the wealthy than for poor Americans.

After months of bitter intraparty feuding and blown deadlines, Democrats are rushing to get their $1.75 trillion social spending bill to Biden's desk. The House is poised to approve it within days and send it to the Senate, where Majority Leader Chuck Schumer wants to put it to a vote by Christmas.

The legislation would set up universal pre-K for American children, broaden Medicare to cover hearing benefits, renew the expanded child tax credit for a year, and pour fresh funding into fighting the climate emergency — all financed with tax increases on rich Americans and large companies.

But another provision sets up some generous cuts for the wealthy.

The plan designates $285 billion to raise the state and local tax deduction to $80,000 from its current level of $10,000, reversing a part of President Donald Trump's 2017 tax law called the SALT cap. It's the single largest program within the House package, set to last through 2026. After that, there would be no limit until 2031, when the $10,000 cap would be reimposed. Put plainly, this law would allow Americans to write off up to $80,000 in state and local taxes from their federal taxes.

Democrats swept into power promising new taxes on the rich, but their maneuvering to get the bill over the finish line could hand the rich a hefty tax cut that dwarfs any for low-income Americans. "It would be preposterous if this legislation ends up cutting taxes for the wealthiest people in America," Democratic Sen. Michael Bennet of Colorado told Insider. "It doesn't make any sense at all."

A recent analysis from the Tax Policy Center found the House legislation would deliver a tax cut for families earning between $500,000 and $1 million roughly nine times larger than for those earning between $50,000 and $75,000. That was echoed by another analysis last week from the Committee for a Responsible Federal Budget.

Bennet argued Democrats should prioritize renewing the child tax credit for longer than a year instead. Most families can receive $3,600 per child under age 5 and $3,000 for each kid 6 to 17.

It may expose Democrats to charges of hypocrisy from the Republican lawmakers who clamored to cut taxes on large firms and wealthy individuals only four years ago under Trump.

A Senate Democratic aide granted anonymity to speak candidly told Insider: "We couldn't be giving Republicans a better gift."

'Republicans are going to mock Democrats for cutting taxes for the rich'

Scrapping the SALT cap has been a top priority for a small group of mostly northeastern Democrats hailing from blue, high-tax states like Rep. Josh Gottheimer and Sen. Bob Menendez, both from New Jersey. Democrats can afford only three defections in the House and none in the Senate.

Gottheimer is among the House Democrats demanding SALT relief as a condition for their support. They argue their middle-class constituents are being saddled with major tax bills and little money to pay it.

It underscores how the party is forced to walk a tightrope as they iron out how to finance the bill without unnerving centrists wary of steep tax hikes.

"The vote count is as important as the budget math," Andy Boardman, an economic expert at the Urban Institute, told Insider. "Because of that, we've ended up in this place where the bill is delivering tax cuts to higher-income folks in blue areas and simultaneously trying to not target the super-wealthy in those areas too hard."

For Democrats, the balancing act has compelled them to shelve ambitious proposals like closing a loophole allowing the wealthy to pass massive fortunes to heirs tax-free. Instead, the House bill includes new surtaxes on multimillionaires.

Republicans are lined up in opposition against Biden's social spending bill. Senate Minority Leader Mitch McConnell of Kentucky has slammed the SALT relief measure, calling it an "obsession" for Democrats.

"Republicans are going to mock Democrats for cutting taxes for the rich — to show that they're out of touch with working class and low-income voters they claim to be representing," Brian Riedl, a budget expert at the right-leaning Manhattan Institute, told Insider. "The middle class is going to average $20 in savings from these reforms."

Democrats are aware of the poor optics, particularly since the party is on course to fail in its endeavor to repeal most of Trump's tax cuts. Some are trying to soften the blow. Sen. Bernie Sanders of Vermont is spearheading Senate negotiations to design an alternate SALT plan that scales back how much higher earners can get.

"I am working with some of my colleagues to make sure that we come up with a proposal that protects the middle class, but does not end up with an overall reconciliation bill in which millionaires are better off tax-wise than they were under Trump," Sanders told reporters on Tuesday.

Menendez, another negotiator, told Insider that Democrats were eyeing a $500,000 income cap for families to get unlimited SALT write-offs. He added they awaited information from Congressional scorekeepers to ensure it wouldn't add to the deficit.

Experts were skeptical that any sizable SALT benefit would reach middle and low-income families.

"It's somewhat less regressive in that it's not going to offer tax cuts to people who make $1 million dollars a year, but it is going to offer huge tax cuts to people making $500,000 or $600,000 a year," Marc Goldwein, senior policy director at the nonpartisan Committee for a Responsible Federal Budget, told Insider.

"Regardless of where they set the income level or the deduction level, it's still going to be a huge tax cut almost exclusively to upper-income individuals," Riedl said.