The Biden Regime Wants More Money
In their huge reconciliation bill, the costliest in history, Democrats seek to raise taxes on both individuals and corporations and thereby undo the rate cuts in the Tax Cuts and Jobs Act of 2017. Before Americans get on board with the Dems’ plans to yet again “soak the rich,” they might look at what that 2017 law helped to bring about.
For the sake of convenience, I’ve spliced together excised details from OMB’s Table 2.1, Receipts by Source. The resulting little chart shows finalized data for 2016 through 2020.
Since the 2017 law went into effect the following year, compare income tax revenue (Receipts) in 2017 and in 2019. Corporate income tax revenue did go down, but that was more than made up for by the rise in individual income tax revenue.
Now, look at Off-Budget receipts for Social Insurance and Retirement, which rose smartly. Why? It’s because more people were employed and paying payroll taxes. And the reason for that is businesses had more of their own money to expand and hire due to the 2017 tax rate cuts.
Pres. Biden has claimed that his predecessor’s “unpaid tax cuts” made the deficit rise. But the 2017 rate cuts did not keep total federal revenue from rising in each of Trump’s first three fiscal years. Only in Trump’s final fiscal year did total revenue flag, and only by $42B. And that was the year of lockdowns due to the coronavirus pandemic.
Now, contrast federal revenue under Trump with that under the Obama-Biden administration, when total revenue didn’t get back to where it was before they took office until their fifth year. (To confirm that, refer to OMB’s entire Table 2.1, which is in Excel.)
There’s a theory called “Hauser’s Law” which holds that it doesn’t make much difference what statutory tax rates happen to be because the feds will always rake in revenue at about the same effective rate. Even so, some Democrats are so desirous of more revenue that they’re gearing up to tax “theoretical income”; income that exists only on paper. They call this ephemeral income “unrealized capital gains.”
On October 22, the New York Times ran “Sinema’s Blockade on Tax Rates Prods Democrats Toward Billionaires’ Tax” by Jonathan Weisman, who nicely summarizes the Dems’ latest tax idea:
To get around [Senator Sinema’s] resistance, they are looking to a proposal by Senator Ron Wyden, an Oregon Democrat and the Finance Committee chairman, that would raise hundreds of billions of dollars with a wealth tax on just 600 to 700 people -- America’s billionaires…
Under the proposal, people with $1 billion in assets or $100 million in income for three consecutive years would be brought into a new tax system. Initially, they would have to assess the current value of their tradable assets -- like cash, stocks and bonds -- and their value when they were purchased, then pay a one-time tax on them…
Then each year, those billionaires would assess the annual increase or drop in the value of those assets and pay capital gains taxes on an increase or take a deduction for losses, whether or not they sell any.
That last clause, “whether or not they sell any,” lets the cat out of the bag. If they do “sell any,” the capital gains tax would of course kick in. It’s when they don’t “sell any” that billionaires would find themselves in a new tax situation, for they would be getting taxed on their so-called unrealized capital gains, despite not having sold any assets.
Wyden’s proposal would open up an entirely new realm of taxation, a scheme that might bring in a bonanza of revenue for a year or two, but then peter out as the wealthy devise strategies to beat it. And here’s the thing: capital gains are taxed as income. How can a rise in the book value of an asset be regarded as income? The Constitution had to be amended so the feds could tax income. The monstrosity that Wyden is conjuring up seems more like a property tax than an income tax.
A less disruptive and surer way to get more tax revenue out of the super-wealthy would be to eliminate itemization for them, whereby they could no longer claim exemptions, deductions, write-offs, loopholes, etc. So, after our billionaire brethren report their total incomes, they would then multiply that sum by their new tax rate to find out their tax bill.
Under the proposal just outlined, if the take from billionaires were to be revenue-neutral, i.e. bring in the same amount of money, their new tax rate might be less than 30 percent. Since they’d have no means by which to lower their taxes, their effective rate would be their statutory rate.
The Dems do have one good idea for high-income earners: taxing capital gains at the same rate as “regular” income. For the swells, all their income should be taxed at one rate.
The Dems are playing with fire. They’re spending all their time trying to figure out ways to take more from us, when we’re facing the possibility of hard times, even depression. Their huge reconciliation bill is highly inflationary, and Fed Chairman Jerome Powell just keeps printing money and sitting on zero percent interest rates. If Democrats were prudent, they’d be trying to get America back to where we were in early January 2020, not building some brave new socialist utopia.
Perhaps the Biden Regime wants more of our money so they can give it to the massive caravans wending their way to our southern border.
Jon N. Hall of ULTRACON OPINION is a programmer from Kansas City.
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