Joe Biden recently released his proposed fiscal year 2024 federal budget, a budget he knows is dead on arrival. In a purely political move, Biden submitted a $6.8 trillion budget he claims will reduce the deficit by approximately $3 trillion over 10 years by raising taxes on Americans who earn more than $400,000, per Reuters. The truth, however, is that Biden’s budget is too woke, too expensive, and favors big government over the ingenuity of the American population.
At a time when we are experiencing stagflation, rising unemployment, and bank failures, Biden’s budget proposal mentions climate change 148 times, equity—which is never defined—63 times, environmental justice 25 times, and transgenderism eight times. The budget calls for $2.6 billion to advance gender equity and equality. He calls for an additional $1.45 billion to “bolster the EPA’s environmental justice efforts, $3.3 billion to support clean energy projects, and looks to include a $3.2 billion loan to the Clean Technology Fund to “finance clean energy projects in developing countries,” per the proposal. In addition, he wants to spend $367 million to support so-called police reform and efforts to “provide equitable access to justice.”
Biden also seems to love the word “free.” Not as in freedom, or live free, but as in no cost. It is apparent, however, that he does not understand the word. He calls for free “high-quality preschool and up to two years of free community college,” among other programs. Yet, unless the preschool and college teachers will volunteer their time, a benefactor donates land, buildings, books, and utilities, it will not be free. It will be paid for, but by taking money from you and giving it to someone else.
How will Joe Biden pay for all these programs? Per PBS, he expects “an additional $4.7 trillion in tax revenues and $800 billion in savings from making changes to government programs.” The tax revenue will be derived from the following, per CNN:
- Place a minimum tax on billionaires: Biden proposes to include a 25 percent minimum tax on the wealthiest .01 percent of Americans, including unrealized gains on appreciated assets. This would impact any household with a net worth of $100 million or more.
- Increase the corporate tax rate: Biden proposes increasing the corporate tax rate from 21 percent to 28 percent.
- Increase the top tax rate: The top tax rate would increase to 39.6 percent, up from 37 percent, impacting individuals making more than $400,000 per year and married couples earning more than $450,000 per year.
- Increase the capital gains tax: The tax on capital gains would increase from 20 percent to 39.6 percent.
These tax proposals only go to reinforce that Biden has never worked in the private sector and doesn’t understand how the economy works. His proposals are rife with flaws and in some cases, are unenforceable.
First, his “billionaire” tax is fatally flawed. Billionaires generally derive most of their income from asset appreciation, rather than salaries. So will they be taxed at the new capital gains rate of 39.6 percent or the minimum tax of 25 percent? In addition, how will the government estimate unrealized gains? Will the government send auditors to appraise the value of art, classic cars, and antiques in the home of every household with a net worth of more than $100 million? Will unrealized losses be tax deductible under this program? While 99.99 percent of the population does not need to worry about this, it simply shows the lack of thought that has gone into Biden’s proposal.
Second, increasing the corporate tax rate would hurt both the economy and working Americans. Increasing the federal corporate tax rate to 28 percent would cause U.S. companies to pay an effective corporate tax (federal, state, local) of 32.3 percent, second only to Colombia in the OECD. This will drive companies out of the United States and will prevent companies from repatriating their profits. Biden believes that he can enact laws to prevent this, but armies of accountants and lawyers hired by corporations will find loopholes and will minimize the tax burden on companies. Shouldn’t we simply make America the best place in the world in which to do business?
Beyond this, we should also remember that companies do not pay taxes. People pay taxes. You pay taxes. Corporations will always look to maximize their profits and the value they create for their shareholders. Raising taxes on corporations will only serve to have them raise prices to the consumer, thus placing a “tax” on every American, in a way, violating Biden’s pledge to never raise taxes on those making less than $400,000 per year.
Third, increasing the top tax rate to 39.6 percent will only serve to hurt small businesses. Many small businesses and Limited Liability Corporations legally file taxes as individuals. Increasing the federal tax rate to 39.6 percent will lead to a decrease in investment, reduce the ability to hire additional Americans, and will likely drive many of these companies out of business.
Lastly, increasing the capital gains tax will impact nearly all Americans. If you sell your home, your farm, or even a piece of family treasure, you would be taxed at nearly 40 percent for doing so, even though the money you used to purchase that asset was already taxed at more than 30 percent before you bought the asset. In addition, if you have a 401(k) or were given stock by your company, you would pay a 40 percent tax on that under Biden’s plan.
I propose a bold response to Biden’s budget proposal. Speaker McCarthy should immediately put forth tax proposals to meet Biden’s requests. The Democrats, especially Biden, will never support these tax increases as they would be a direct affront to their donors. Let Republicans put the Democrats on record about their tax-and-spend policies before the budget comes up for debate. It is time to show America who will lead and who will simply give speeches.