The Great American Tax Hike
By Trish Regan
Remember when Biden told us the $1.9 trillion would be just a "down payment?"
He wasn't kidding...
Get ready, America. The great American tax hike is in the works.
After all, you can't spend $1.9 trillion you don't have... let alone an additional $2 trillion to $4 trillion, which is what the Biden administration is now prepared to ask for.
The Big Tour With a Big Ask
President Biden and Vice President Harris are gearing up for a grand cross-country tour in the coming weeks. The two are embarking on a series of public speaking events in an effort to help sell the American public on the idea of trillions more in stimulus spending.
The Biden presidency is modeling itself after the likes of FDR... This is a "New Deal" with new projects like basic income, infrastructure, and possibly even reparations for Black Americans all in the works.
To pay for their massive undertaking, Biden and Harris intend to propose the biggest increase in federal taxes since 1993. These tax hikes, if approved, would take effect next year.
And let me be clear, these aren't just any little ol' tax hikes. The Biden-Harris proposal will be a mammoth...
Biggest Tax Hikes Since 1993
For starters, President Biden and his team want to raise the corporate income tax from the current 21% to 28%.
They also intend to raise income taxes on individuals earning more than $400,000.
Not to mention, they will expand the reach of the estate tax.
And finally, they want to raise capital gains taxes on folks with incomes over $1 million dollars. Oh, and don't forget, while on the campaign trail, Biden proposed applying income tax rates on investments in capital gains.
That's not all... There's even talk of a wealth tax, something Treasury Secretary Janet Yellen admitted in a recent interview with George Stephanopoulos on ABC's This Week... "That is something we haven't decided yet and we can look at."
Really? I mean, wouldn't that in fact be unconstitutional? Didn't Congress need to pass a constitutional amendment to secure the income tax in 1913?
But progressives never met a tax they didn't love...
Government Gone Wild
This is what I call "government gone wild."
We have a group of people in Washington that have never really rolled up their sleeves and worked in the real world. They don't know what it's like to be a small-business owner trying to make payroll, nor do they know what it's like trying to save over your entire life so you'll have something to leave to your family.
They fundamentally believe in a different kind of system... a socialist system (or worse) in which business is bad, income is bad. And government (because in their utopian world, they run it) is good.
That belief is what has led a group of progressive lawmakers (with Sen. Elizabeth Warren at the helm) to recently introduce legislation that would create an annual 2% tax on the net worth of households between $50 million and $1 billion. The proposal also allows for an additional 1% on those above $1 billion.
According to Warren, it's simply the right, most justifiable thing to do...
This is a wealth tax that has been needed for a long time. We need it to produce more revenue, to create more opportunity in America. But it is a wealth tax that we particularly need because of the changes in this country... As Joe Biden says, "it would let us make the investments in our children, investments in infrastructure, investments in a clean economy, investments in America's future."
Too bad for Warren (and Biden), a version of that has been tried quite recently and declared a miserable failure.
The French Super-Tax Failure
In France, under President François Hollande's leadership, the government introduced a "super tax" in 2012. That 75% super tax on individuals earning more than 1 million euros was almost immediately declared a total disaster – and by 2014, it was dropped.
Instead of helping the French government to collect more revenue, the super tax reduced government tax revenues, restricted economic growth, and spurred a massive flight of capital offshore. French citizens moved abroad, relocating to the U.K., Belgium, and other countries that offered more competitive tax rates. Heck, even the famous French actor Gérard Depardieu wound up becoming a Russian citizen for tax reasons!
As Steve Forbes explained in an interview with me on this week's edition of my podcast, corporations and wealthy individuals will find work-arounds if Biden moves forward with a wealth tax or any other onerous tax proposals.
This is why the Laffer curve is still so relevant. (I encourage you to check out my podcast interview with famed economist Dr. Art Laffer here.) It's critical to provide a balance that enables businesses and individuals to grow – because that growth ultimately benefits all.
For all the Left's complaints about the Trump administration, before the pandemic hit, our economy was expanding... Unemployment levels were some of the lowest in history and medium incomes were some of the highest. Importantly, the Trump administration's lower taxes on corporations and individuals resulted NOT in less revenue (as Warren, Sanders, AOC, and Biden and Harris would like us to believe), but instead with record tax receipts.
Imagine that – you lower taxes and you collect more tax revenue! The Laffer curve strikes again...
And that's the way it should be... Government needs to incentivize people and businesses to invest more. Creating the right incentives helps result in growth and more revenue for everyone, government included.
But what Democrat politician can resist the age-old class war argument? It's politically expedient and helps politicians to maintain control over everyone and everything.
The reality is Biden's proposals would result in less growth, less output, and less tax revenue... not to mention higher deficits, since even with higher taxes, our federal government is still unable to pay its bills.
The Good News
Meanwhile, why discourage people from investing? Shouldn't our government want people to invest in American companies? By instituting an income tax on investment income, the government will surely suppress investment.
Think about it... If you are going to be charged the same as income, why roll the dice and take the chance of investing your money in a company that you don't fully control?
The good news is, this is not where America is right now... Although, Americans on both sides of the aisle like the stimulus checks (who wouldn't appreciate an extra $1,400?). But Americans are not prepared to sign off on massive estate taxes, huge capital gains tax increases, and higher individual tax rates for a series of progress projects like basic income, a government health care system, reparations, green energy, etc.
In fact, I suspect this growing power grab by the Left will be met with some serious resistance... which may result in a shift of power in Congress come 2022.
Even without that, I suspect Biden's tax increases will not fly.
Biden, after all, would need Congress's help in accomplishing these measures. Sen. Joe Manchin (who has become one of the most important people in D.C.) has already indicated that he's not in favor.
Ultimately, the Biden-Harris team is trying to convince America to be something she is not...
The Democrats won the election, but that was more an indictment on Trump's personality than his policies. In fact, the country is still just right of center... and any attempts to construct a massive New Deal akin to FDR's will surely backfire (as they should).
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