Biden’s Tax Plan Has a Big Problem
Amanda Heckman|June 19, 2021
If things keep going the way they are in Washington… we’re going to have to start a column called “News of the… Duh.”
This week we learned that President Biden’s infrastructure plan would likely fail to live up to its name – the American Jobs Plan – if passed.
The plan tries to redefine “infrastructure,” with all sorts of spending on racial justice, caregiving and climate change… along with the usual roads and bridges.
But there’s a big problem, aside from all the pork squeezed into it. An analysis by the Tax Foundation found that the plan would result in 100,000 job losses.
It’s all thanks to the topic du jour… taxes. Or, more specifically, Biden’s campaign to tax the rich and the companies they own to pay for EVERYTHING.
Here’s the thing…
Washington seems to have forgotten that no one – and no business – exists in a bubble. Any tax hike would have far-reaching consequences for you and me.
Here’s what the Tax Foundation had to say about the jobs plan and how it would be paid for…
The positive economic effect is entirely offset by the increase in corporate taxation, resulting in less corporate investment, which reduces GDP by 0.5% in the long run, reduces wages by 0.5%, and eliminates 101,000 full-time equivalent jobs. Gross national product, a measure of American incomes, falls by 0.3% in the long run.
In other words, American workers would see reduced wages, lower income and fewer jobs as a result of a jobs bill. Oh, the irony.
It would be funny… if it weren’t so dangerous.
Corporations wouldn’t be the only ones on the hook for funding the jobs plan. New York Rep. Thomas Suozzi has proposed a one-time “patriot tax” on the wealth of the richest Americans to help pay for the bill and other Biden spending proposals.
He says the fact that wealthier folks made out better than most during the pandemic more than justifies his idea.
The tax would range from 2.5% to 5% and be payable over a five-year period.
In a cringeworthy statement, Suozzi said the tax would be “a way to help your country build back better.”
Because running a business or investing in venture capital and innovation does nothing for our country?
But this tax heist gets even better…
You may have heard of ProPublica’s “bombshell” non-story about the tax bills – or lack thereof – of Jeff Bezos, Warren Buffett and their billionaire friends. Seems some crack journalists came up with funny math to calculate a “true” tax rate on unrealized gains on assets versus actual income.
Unfortunately for them, that’s simply not how the tax code works… and reporting as if it were sets a dangerous precedent.
Could we one day see an annual tax on all the appreciable assets we hold for the long term – our investment accounts, houses, collectibles, etc.?
It’s a scary thought.
There are plenty of folks who want to see it happen.
Never Saw It Coming
While Biden has promised that his tax proposals would affect only the richest of households, here’s the hard truth…
The Tax Policy Center found that 75% of households earning between $75,000 and $100,000 would face higher taxes as a result of Biden’s proposal, with an average increase of $440.
The increase would come in the form of income, payroll and corporate taxes.
Those taxes would also be felt by shareholders in the form of lower earnings.
And let’s not forget that many consumer-driven businesses would likely raise prices in response to higher corporate taxes.
Yet, with all these “indirect taxes,” Biden would be able to keep his promise of not raising taxes on the middle class.
How’s that for some funny math?
Sounds like the White House needs a reminder that raising taxes hurts everyone in the long run.
Amanda Heckman|Editorial Director
Amanda Heckman is the editorial director of Manward Press. With unrivaled meticulousness, she has spent the past dozen or so years – give or take a few sabbaticals – sharpening Andy’s already razorlike wit. A classically trained musician and a skilled writer in her own right, Amanda takes an artistic approach to the complex world of investing. Her skill has led her to work with numerous bestselling authors, award-winning financial gurus and – lucky for us – the fine folks at Manward Press.