Guess Who’ll Pay Biden’s Tax Hikes On The ‘Rich’? Hint: It’s You
by I & I Editorial Board, March 18, 2021
If you’re an American of average income, listen up. You’re about to become a lot poorer. President Joe Biden’s proposed soon-to-be-unveiled multi-trillion dollar tax hike, the first major increase in taxes since 1993, will ensure that.
With a massive wave of new spending on the way, it was only a matter of time before Biden and his far-left economic team came up with massive new tax increases to match. You might be happy with your $1,400 “stimulus check,” but you won’t be happy with the higher taxes you’ll be paying from now until you die.
That’s right, because no matter what the Democrats said during last year’s presidential campaign about “taxing the rich” and “big corporations” it’s the middle class and the poor who will really take a hit.
Though still in the discussion phase, the White House says only those earning more than $400,000 a year will feel the pain. They’ll face higher taxes on their estates and so-called pass-through businesses, including limited-liability companies and partnerships. Millionaires might get a double-whammy, with both higher income and capital gains taxes.
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A tax-fairness win for the little guy? Don’t believe it. Biden also wants to raise the corporate tax rate from the current 21% to 28%, a one-third increase. And that tax on “pass-through” businesses? That’s a tax-code euphemism for “small businesses.”
Stick it to the man, right? Sorry, but the man is you.
“Tempting though it is to wish that faceless entities like corporations would shoulder the burden, sparing individuals the pain, in reality corporate taxes are always financed by people,” notes economist Michael Strain of the American Enterprise Institute. “The only question is which ones.”
The fact is, when corporate and small business taxes go up, workers’ wages and benefits go down. That’s not even controversial among economists. At least not the sane ones.
The Congressional Budget Office, for instance, automatically assumes when government raises taxes on corporations, roughly 25% of that comes right out of workers’ pockets. Private economists’ estimates are much higher: 50% and more.
Whatever’s left comes straight from consumers and investors, who are often the same people. They pay through higher prices (consumers) and lower returns on investments (investors). Remember: If you have a 401(k), you too are an investor.
The corporation pays nothing. People do.
Worse, as the Committee to Unleash Prosperity pointed out this week, “Treasury Secretary Janet Yellen is also exploring a carbon/energy tax and a 2% annual wealth tax.”
Add it all up, and American companies would once again have the highest overall tax rates in the developed world. We’d again be uncompetitive with other nations, meaning fewer jobs and less investment here. An energy tax would hamstring U.S. producers, and discourage those with wealth from investing more at home.
A slow-motion economic disaster in the making.
How is that good for anyone?
Whenever you tax something, you get less of the thing you tax. That’s a truism, not an opinion. Want fewer businesses and slumping sales? Less hiring? Lower wages? Fewer and lower benefits for employees? Just raise taxes on corporations.
And you’ll also get a much weaker economy over the long term.
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