|
 "People who complain about taxes can be divided
into two classes: men and women." – Will Rogers
Every Democrat running for every office in the United States echoes a standard
campaign theme: "I plan on taxing the rich and spreading the wealth around."
They chant, the rich do not "pay their fair share of taxes and it is time that
they do." They preach, "It is time to reduce income inequality." Their gospel
is, "Those who have benefited the most should help those who have benefited
least."
Who do leftists consider rich when they obsess about raising taxes? The Tax
Policy Center says about 10% of U.S. households have incomes over $200,000. The
top fifth of them pay 69% of all federal taxes. If "the rich" already pays more
than their fair share, why does the left always demand that they must pay more?
This is the paradigmatic liberal axiom: "It is time that we punish the rich."
Joe Biden ran for president on a "tax the rich" platform, and eked out a victory
over the populist Donald Trump. But he toned down the rhetoric for a few months
while lobbying for his "Build Back Better" pipedream. But in true progressive
form, he broke the bad news to taxpayers last week. As Congress unwrapped
Biden's 2023 wish-list, it was "Christmas in Spring" for Republicans.
Biden's 2023 fiscal budget re-proposes all of the bad ideas that Congress won't
pass and adds a new twist – "the coveted liberal wealth tax." Biden is obviously
pivoting further left to fire up sullen progressives for the midterm elections.
This gives them new ammunition to assail the evil GOP.
"All we are doing is equalizing the playing field, making sure the rich will pay
their fair share." – Joe Biden
Biden's wish-list calls for increasing the top marginal income tax rate to 39.6%
from 37%. It would also nearly double taxes on capital gains to 39.6% for people
earning over $1 million. This would be the highest tax rate on investment gains
since the 1920s. The rate has never exceeded 33.8%.
The left calls this a “billionaire tax,” which is the standard progressive
narrative. But billionaires are not the only ones punished. It applies to income
and "increased annual value of assets." This taxes "unrealized capital gains,"
which are not taxed until assets are converted to income. In other words,
Elizabeth Warren and Bernie Sanders will be getting the wealth tax they have
been begging for.
This tax scheme will enormously complicate the tax code and creates huge
investment distortions. Since liquid assets make up less than 20% of their
wealth, investors will have an incentive to hold liquid assets, such as real
estate, to avoid liquidating stock to pay taxes. Rather than sell stock to
diversify or reinvest, investors will be forced to sell stock to pay taxes on
unrealized capital gains.
In simple terms, this means that hundreds of successful entrepreneurs and small
business owners, who accumulated wealth over decades through innovation and hard
work, will be punished for their success. Any tax that the left proposes always
"applies to a few," and spreads to millions overnight.
"The IRS tax code is too difficult for a mathematician. It takes a philosopher."
– Albert Einstein
News of Biden's proposed tax hike swept through investment circles like an EF5
tornado. The S&P 500 index immediately dropped 1%, the sharpest Wall Street
decline this year. Fund manager Thomas Hayes exclaimed, "If we thought this had
a chance to pass, the market would have dropped 2,000 points.
There is another fly in the ointment in Biden's tax scheme; it is illegal! The
Constitution states that Congress may only impose “direct taxes.” Although the
16th Amendment established an income tax, unrealized capital gains are not
income. In other words, Biden is taxing "anticipated income?"
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Wealthy Americans could face an overall federal capital gains tax rate of 43.4%,
including the 3.8% net investment tax on individuals with income of $200,000 or
more ($250,000 married filing jointly).Currently, those earning more than
$200,000 pay a capital gains rate of an average high of 23.8%
The Tax Foundation's Erica York said, Biden's tax increase would drive U.S.
capital gains taxes to the top of global charts. Capital gains taxes in Europe
average 19%. Denmark had the highest rate at 42%, followed by France and Finland
at 34%. These countries finance socialized medicine and generous entitlements
the U.S. does not have, which makes Biden's tax hikes even more offensive!
Biden's tax increases would generate over $1 trillion, which is on top of his
$2.3 trillion jobs and infrastructure plan that many Americans are now rejecting
due to rising prices and inflation. This will likely mean that Democrats will be
forced to push this through Congress using reconciliation.
That would mark this as "a party-line tax increase on the rich" for Democrats
seeking reelection.
York added, in the states and cities that assess their own capital gains levy,
Biden's plan would push the total capital gains rate to over 50%. The rate would
rise to 56.7% in California, 58.2% in New York City and 57.3% in Portland,
Oregon. He said investors will take their capital elsewhere.
White House press secretary Jen Psaki said Biden had not yet finalized his tax
plan, but stressed he promises to make the wealthy and companies pay for all new
government programs. "His view is that all tax increases should be on the backs
of the wealthiest Americans who can afford them."
Although Biden promised not to raise taxes on those making under $400,000 a
year, one White House spokesman said Biden is looking at capping the interest
deductions for homeowners. By decreasing this traditional real estate tax
write-off, this will affect every person who owns a home.
"There may be liberty and justice for all, but there are tax breaks only for
some." – Martin Sullivan
Ralph Nader told us, "Your best teacher is your last mistake." Joe Biden
endorsed southerner Jimmy Carter for the presidency over the party’s northern
candidate. After suffering through four years of Carter's failures, Biden
watched Ronald Reagan take office and turn the economy around by cutting
spending and taxes. One must wonder, was Joe Biden asleep during the Reagan
years?It took Jimmy Carter four years to destroy the U.S. economy, but Biden did
the same in under a year. With the Fed raising interest rates, runaway
inflation, and investors running scared, a tax increase of this amplitude will
domino into a recession. This will complete Joe Biden's "make-over" into the
second coming of Jimmy Carter. And who said, "We can't turn back the hands of
time?"
Biden gave us double digit inflation, labor shortages, a broken supply chain and
high energy prices. All of America realizes, except Joe Biden and progressives:
"Nobody can tax and spend their way to prosperity." Biden's "punish the rich"
tax increase will result in less investment, a loss of jobs, decreased capital
gains taxes, and a major recession. Biden says he learned his politics from
Barack Obama. Well, it looks like he learned economic policy from Jimmy Carter.
Its déjà vu all over again for America.
"I wish I had known when I was in the White House what I know now." – Jimmy
Carter |
