The Biden Administration recently announced a blueprint to fund the $3.5 trillion climates and family plan as part of President Joe Biden’s “Build Back Better” agenda. As part of the order, there would be a set of new taxes on corporates and the top U.S households, increasing the corporate tax to 28%, doubling the capital gains tax to 39.6%, restoring the top individual income tax rate to 39.6%, and taxing capital gains at death. History has shown that every time taxes are raised, the economy declines. But the Biden Administration continues to ignore the obvious.
As part of an analysis for the tax blueprint, experts found that the middle class would see a slight overall increase in their taxes toward the end of the decade. While taxes would increase for the wealthy, they would also increase for those in lower brackets (and once the expanded child tax credit expires). The average tax rates would be higher and working Americans would have to pay the price for Biden’s plan through inflation, stagnant wages, and lost jobs.
Some business groups have even warned the Biden Administration that the tax hikes would devastate the American economy and lose about 1 million jobs under the proposed corporate tax rate. The National Association of Manufacturers even calculated that the policies would stall the economy’s recovery post-COVID-19, with the association’s CEO Jay Timmons saying there would be no way to avoid the “widespread job losses.”
Timmons went on to explain how this would be a “step backward” for the U.S economy, adding that the government pricing would kill America’s competitive advantage and lead to higher prices. The U.S Chamber of Commerce also promised to do everything in its power to prevent these taxes from being raised and the “job-killing reconciliation bill” from becoming law.
Democrats have emphasized how they can’t afford to lose a single vote in the Senate and only a few in the House, which has made the budget reconciliation process a “tightrope act” for leaders. Many leading Democrats, including Sens. Joe Manchin and Kyrsten Sinema, have actively opposed certain parts of the bill such as the child tax credit.
The child tax credit would increase the money that families receive per child from $2,000 to $3,600 for those under 6 years old and $3,000 for older children. The GOP has ripped certain aspects of the tax credit, including the way it was made so that parents who are not working and have no income could still receive the entire sum. Politicians have called it “welfare without work” and another way to pay people to sit at home. Sen. Manchin has suggested adding a work requirement to the provision.
By 2027, the average tax rates for those making up to $75k annually would rise 1%, those making up to $100k annually would see their rates increase 1.3%, and those making up to $200k annually would see their rates climb by 1.5%. The report describes how the average tax rates would be higher through 2031, but “more modestly so.”
In terms of job losses, a recent study conducted by Arizona State University found that the tax hikes on approximately 266 multinational corporations in their state would cause 1,508 to 27,728 direct job losses just a year after the increase takes effect. The Biden Administration has proposed increasing the Global Intangible Low Tax Income rate from 10.5% to 21%. Tim James, director of research and consulting at the Seidman Research Institute, explained why the rates result in other issues besides physical capital.
“The GILTI tax is basically a tax on earnings in foreign countries for U.S.-domiciled corporations that exploit the copyright, trademarks, intellectual property or other intangibles for profit,” James said.
James went on to talk about how this not only exploits intellectual property but results in indirect and induced job losses. He said it would only dampen their economic growth and would result in a total annual loss of 0.06% to 1.14% of jobs in Arizona across all industries.
The Biden Administration should know by now that you can’t multiply the wealth by dividing it. The elected Congress and Senate represent some of the richest people in the country. That seems to be the problem, but they’d rather see the economy crash.