Photo by The New York Public Library on Unsplash
It’s the same old story about tax-and-spend-policies. Details in President Biden’s inflationary proposals have emerged and would cause great fiscal harm to the nation.
Yes, we’ve heard all about Biden Administration plans to hike taxes on wealthy Americans and corporations.
We’ve also heard President Biden wants to raise the corporate tax rate from 21 percent to 28 percent – this after the Trump tax reform law lowered it from 35 percent to stop it from being among the highest in the world.
Pushed by U.S. Treasury Secretary Janet Yellen, the world’s seven-leading nations agreed on a global minimum tax of 15 percent on international corporations. She claims it would by preventing “a race to the bottom” by deterring companies from moving to lower-tax nations.
However, she’s got it wrong. With a combined 28-percent tax rate and global minimum tax of 15 percent, America will become less competitive because companies will revert back to the pre-Trump era of offshoring jobs, investments, manufacturing and research overseas.
But there’s more to President Biden’s frightening plans. A lot more.
If he succeeds, there’s a lot to fear from inflation in rising prices, taxes and a slow-growth economy.
In essence, high inflation is bad for the economy. It shrinks the value of money, and produces little or no growth and high unemployment.
Most often it greatly hurts low-wage earning Americans who work at low hourly wages and retired folks who live on fixed incomes. Both groups suffer because their income is stagnant while their expenses increase.
The Federal Reserve can try to slow the rate of inflation. But it means high interests on loans and credit cards. If the Fed is too slow to respond, inflation will rage out-of-control.
The tragedy is that President Biden and the Federal Reserve are in denial regarding the harsh economic impact on average Americans. All they have to do is look back at the nightmarish 1970s.
Inflationary trend
Prices are already spiking in every sector (Inflation is back. Biden should be worried – CNN).
Meantime, President Biden wants to end the Trump tax cuts for middle and low-income Americans,
Not only would an increase in corporate taxes impact wealthy Americans, it would likely be a harmful catalyst impacting 75 percent of middle-class families in terms of layoffs or flat wages if their employers are hit with high taxes.
Again, don’t forget middle-class families would lose their Trump tax cuts.
Risky measures
Plus, Mr. Biden wants impose other risky measures:
- Increase the top marginal tax rate for ordinary income from 37 percent to 39.6 percent. In many cases, these individuals are employers.
- He would double the taxes on investors’ capital gains and qualified dividends of more than $1 million. (Over a 10-year period, such an increase would raise $322.5 billion according to the Treasury Department.)
- He would repeal $17.8 billion in tax credits over the next half-decade for oil and gas companies.
- On certain inherited assets, he wants a death tax on people who inherit $1 million or more in property. He wants the beneficiaries to pay capital gains taxes on the full appreciation in value – from the time when the property was originally purchased. (Now they only pay taxes after inheriting the property.)
Inflationary pressure
The proposal to hike taxes on oil and gas companies would greatly increase the price at the gas pump and would devastate the average hardworking American and small business.
You and I are already paying at least 30 percent higher fuel prices this year.
This is just one reason why inflation has ballooned to its highest level since 2008. And this exponentially means even more inflation and the loss of more jobs on top of the thousands of jobs Mr. Biden has eliminated in shutting down the major pipeline from Canada.
You might recall the phenomenal growth in wages and jobs under the Trump Administration. But under the Biden White House, inflation has been ramping up twice as fast as the growth in wages.
This, of course, means the buying power for the average person has plummeted.
Will lose 6 million jobs
Published reports quote Kevin Brady, the top Republican on the House Ways and Means Committee Kevin Brady (R-TX), as pointing out Mr. Biden’s repeal of the Trump tax cuts would kill six-million jobs over the next 10 years.
Mr. Brady had another warning about repealing the tax cuts:
“That means that a middle-class family of four making just $73,000 will have their family budget robbed by $20,000 over time,” Mr.Brady informed Treasury Secretary Janet Yellen in June 2021.
Also to the detriment of the country, Mr. Biden wants to impose at least $3 million more in tax increases to pay for childcare, healthcare, education, paid leave and green energy.
Mr. Biden claims middle-income taxpayers won’t be hurt, but in reality the middle class would have to share in the burden to finance his schemes.
He isn’t just trying to repair the nation’s bridges and roads. He’s really attempting to buy votes and make it possible for Congressional Democrats to pass the $3-trillion tax increase through reconciliation.
If labeled a reconciliation bill, it can pass the Senate even with a 50-50 tie with Vice President Kamala Harris casting the tie-breaking vote. Budget reconciliation bills can annually deal with issues of revenue, spending and the federal debt limit.
Grossly unfair to future generations
Such fiscal dysfunction is grossly unfair to future generations as the nation’s debt clock continues to rapidly tick higher with more red ink:
Fortunately, Mr. Biden is catching some flack from at least one leading Democrat, House Agriculture Committee Chairman David Scott of Georgia.
“Any increase in inheritance tax for those taking over farmland is untenable and will further strain a farm economy that is just now beginning to recover from the strain of the pandemic,” Mr. Scott wrote the president. “The potential for capital gains to be imposed on heirs at death of the landowner would impose a significant financial burden on these operations.”
Many of these people are entrepreneurs and employ a great many workers.
So as the fiscal battle rages, the question is: Will Republicans gain control of the House, Senate and White House in time to stop the madness and the true race to the bottom?
From the Coach’s Corner, read the Op-Ed writings of economist Peter Morici and other public-policy articles.
“Government spending is taxation. When you look at this, I’ve never heard of a poor person spending himself into prosperity; let alone I’ve never heard of a poor person taxing himself into prosperity.”
-Arthur Laffer
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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.
