As we slowly emerge from a year-long economic shutdown, President Joe Biden’s plan to raise taxes to levels not seen since the Carter era is raising alarms.
According to the Washington Post, White House officials are exploring tax increases on businesses, investors and Americans who earn more than $200,000 to fund the president’s multitrillion-dollar infrastructure and jobs package. Tax hikes would likely include a higher corporate tax rate — reversing part of President Donald Trump’s steep corporate tax cut in 2017 — as well as higher levies on investment income and a higher top marginal tax rate.
Americans for Tax Reform (ATR) is warning Americans that Biden has a history of breaking tax pledges and will do it again. ATR vice president of communications John Kartch said when Biden ran with Barack Obama in 2008, they promised not to raise taxes on anyone making over $250,000.
“But once they were safely elected, they broke that pledge several times,” Kartch explained. “The reason we know he’ll break his pledge this time is because even during the campaign, he would say, ‘Hey, we’re not going to raise taxes on anyone making less than $400,000,’ then in the next breath he would say, ‘We’re going to repeal the Trump tax cuts.’
“Repealing the Trump tax cuts is a clear violation of his pledge. Like everyone else, Biden knows the real money is always in the middle class, so eventually that is where he’ll go,” Kartch added.
Kartch said Biden and congressional Democrats are considering at least seven other tax increases, on top of the tax hike on those earning over $200,000.
Corporate tax rate hike.
Democrats want to raise the current 21% corporate rate to 28%. This would give the United States a higher rate than our economic competitors, even higher than China’s 25%. A rate hike would reduce jobs, wages, and capital formation.
Kartch explained that raising corporate taxes would directly impact consumers in the form of higher utility bills.
“Democrats always want you to think of corporations as big impersonal multinational businesses, but there are many small to midsize businesses that are organized as corporations,” explained Kartch. He said those businesses make up Main Streets of towns across America. “They might employ 100 people, sponsor the Little League team, and are deeply involved in their community.”
According to the Congressional Research Service, “The majority of both corporations and pass-throughs in 2011 had fewer than five employees (55% of C corporations and 64% of pass-throughs). Nearly 99% of both corporations and pass-throughs had fewer than 500 employees, the most common employment-based threshold used by the Small Business Administration (SBA).”
Capital gains tax rate hike to the highest level since Jimmy Carter in 1977.
Biden has vowed to tax capital gains as ordinary income for all taxpayers regardless of income level. This is a long-term progressive goal.
Biden wants to take the top capital gains rate to 40%, the highest rate since Jimmy Carter in 1977. Combined with state capital gains taxes, many Americans will face a capital gains rate of 50% or higher. Californians will face a 56.7% capital gains tax.
Capital gains tax hike through the removal of “step up in basis”
Currently, when someone dies and leaves an asset, the recipient receives the asset at its “stepped up” basis, meaning the current value of the asset. Biden wants to remove stepped up basis. This means that when somebody dies and leaves an asset, the recipient of the asset will immediately be forced to pay capital gains taxes on the difference between the acquisition cost of the item (which may be hard to determine if it was acquired decades ago) and its current value.
Re-imposition of the Obamacare individual mandate tax.
Biden said during the campaign that he would like to re-impose the individual mandate tax. The 2017 Trump tax cuts reduced the penalty to $0, but the “mandate” is still in law. Previously, it was $695 for an individual and $2,085 for a family of four. 75% of households stuck paying this tax earned less than $50,000 according to IRS data.
Payroll tax increase.
Under current law for 2021, payroll taxes will be levied on income up to $142,800. Biden wants to impose payroll taxes on all income above $400,000. He will not index it to inflation, so the donut hole between $142,800 – $400,000 will shrink every year until everybody is paying it.
A hike in carbon taxes has been endorsed by Biden, Harris, John Kerry, Janet Yellen, Pete Buttigieg, and many others in the Biden camp.
$200 gun tax
Biden has called for the mandatory registration of semi-automatic firearms (most guns are semi-automatics). The mandatory registration requires submission of a 13-page questionnaire complete with fingerprints and a $200 tax per gun, even for existing privately owned guns.
Kartch predicts Biden will get his tax hikes through the House but will face difficulty in the Senate. “These taxes are going to hit and when these senators go back home, they’re going to be getting an earful from people,” he said.
Sen. Patrick Toomey (R-Pa.) told the Washington Post, “There’s no good case for anything like the kind of tax increases they’re advocating. ” Toomey helped craft the 2017 GOP tax legislation. “The idea we should agree to some huge economy-crushing tax increase so the government can go on yet another spending binge is a nonstarter for me.”
Even Democrats know that there is only so much they can fleece the rich to pay for their gargantuan spending programs and eventually, they’ll be coming for everybody to pay for it.
Catherine Mortensen is Vice President of Communications at Americans for Limited Government.
Cross-posted with The Daily Torch
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