By Louis DeBroux
Despite Joe Biden’s repeated promises to never raise taxes on anyone earning less than $400,000 per year, he is now working with Democrats in Congress to hammer the middle class with devastating tax increases.
At issue is the so-called American Jobs Plan (AJP), a $2 trillion boondoggle of progressive wish-list spending, combined with a $2.5 trillion tax increase. In this case, the tax increases are designed to achieve maximum political benefit for Democrats by tapping into their base’s desire to see the evil “rich” and corporations punished with higher taxes, but in a way that obscures their fingerprints on the pain the working class will suffer.
Democrats are depending on what ObamaCare architect Jonathan Gruber called “lack of transparency” and the “stupidity of the American voter” in order to pass the AJP as they did ObamaCare — by promising things they know they can’t deliver in order to get the increased spending they lust for.
In reality, increasing the corporate tax rate primarily hurts average Americans because corporations don’t pay taxes, only people pay taxes.
Because when corporations are hit with higher taxes, they simply pass the cost along to workers in the form of lower wages and reduced benefits, to customers in the form of higher prices, and to shareholders in the form of reduced dividends on investments.
Many Americans have a tendency to think of investors as wealthy, wine-sipping fat cats who live in mansions and spend their weekends on their yachts. There’s good reason for the stereotype, but in reality, a huge percentage of investors are the working class who spend years putting hard-earned money into pensions and 401(k) retirement accounts.
A corporate tax increase will raise the cost of goods and services — food, housing, electricity, transportation, appliances, etc. — on the front end, and result in less take-home pay and reduced retirement savings for the middle class on the other end.
Millions of Americans may cheer Democrats for sticking it to the rich, only to discover that Democrats consider them rich, even as they struggle to make ends meet.
When President Donald Trump signed the Republicans’ 2017 Tax Cuts and Jobs Act, slashing corporate income tax rates from 35% (highest in the world) to 21% (one of the lowest), it unleashed an economic boom the likes of which had not been seen in decades. Millions of new jobs were created, and real household income soared by $4,400.
Furthermore, the 2017 TCJA incentivized American multinational corporations to bring their overseas profits back home, and they did, repatriating a staggering $1.6 trillion in capital. These same corporations also began investing in America, opening new factories here and creating countless thousands of high-paying jobs.
Biden knows that reversing the Republicans’ tax cuts and increasing corporate tax rates by 33% would result in American companies fleeing for foreign lands with more favorable tax treatment, which is why Treasury Secretary Janet Yellen is working with the finance ministers of G20 nations to enact a global minimum tax rate, effectively limiting the ability of companies to escape harsh tax treatment. Unfortunately, the harmful impact on consumers and workers would remain.
In pushing for his tax-and-spend plan, Biden revealed the progressive Democrat mindset — that all of your money belongs to them, and you’re lucky to get what they let you keep. As he put it, “I didn’t hear any of our friends, who are criticizing this plan, say that the corporate tax cut, which added $2 trillion to the debt — the Trump tax cut, $2 trillion — $1.9 trillion in debt — wasn’t paid for.”
Tax cuts are reductions in the rates at which government confiscates your earnings. By arguing that tax cuts must be “paid for,” Biden is saying your earnings belong first to the government.
Secretary Yellen, in endorsing the AJP and the global minimum tax, flat-out lied when she claimed, “Our tax revenues are already at their lowest level in generations.” At $3.86 trillion for FY2021, tax revenues are not only not at their lowest point in generations, they are at their highest nominal point ever, and nearly double the tax revenues received in FY2009, the last time there was a year-to-year drop in revenues. As a percentage of GDP, tax revenues are within the post-World War II average.
Yellen also claims the revenue generated by the Made in America Tax Plan would pay for “investments” that would in turn increase GDP by 1.6% in just three years. But an analysis by the University of Pennsylvania’s prestigious Wharton School of Business found that Biden’s plan would reduce GDP by 0.9% by 2031, resulting in hundreds of thousands of jobs lost and lower wages.
Couple that with new federal mandates and expensive new regulations, and the economy will slow to a crawl, just as it did in the Obama-Biden years.
With a 50-50 split in the Senate, and Democrat Senator Joe Manchin saying he will vote for “only” a 20% corporate tax increase, Biden will have a hard time passing this bill, even using reconciliation, so now he is trying to browbeat Republican lawmakers into supporting his plan.
This plan is disastrous for working-class Americans.