My former boss and mentor Dick Armey, the former House majority leader, used to quip that "liberals love jobs, but they hate employers."
Based on his budget proposal released earlier this week, you would have to say that Biden flat-out loathes employers. Never before in American history has a president released a budget/tax plan that wallops American businesses with a bigger tax bill than this.
The budget Biden proposes contains roughly $4 trillion in higher taxes over the next decade. He keeps saying that he just wants millionaires and billionaires to "pay their fair share," but this plan isn’t so much a punch in the nose to the wealthy (who already pay 42% of the income taxes) but to the nation’s small business owners and the shareholders of large and successful American companies.
BIDEN’S $7-TRILLION BUDGET GAME TAKES MORE OF YOUR MONEY. GUESS WHERE IT GOES
The snapshot below shows the current tax rates and the tax rates proposed in the Biden budget.
BUSINESS KILLERS
Trump vs. Biden
Small business tax rate: 39.6% vs. 44%
Capital gains tax: 23.8% vs. 39.6%
Corporate tax: 21% vs. 28%
Tax on Unrealized Capital Gains: 0% vs. 20%
Medicare tax: 3.8% vs. 5%
Stock buyback tax: 1% vs. 4%
The Biden budget would raise the personal income tax rate to its highest level since Jimmy Carter was president. The problem with this scheme is that a majority of the tax filers in that highest tax bracket are not people like high-paid superstars like LeBron James or Ariana Grande.
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Most of the tax fliers who will be socked with the higher taxes either own, invest in or operate small and medium-sized businesses. (Remember, most small and medium businesses do not pay corporate taxes, the owners pay the taxes on the company under the personal income tax system.) So how are you going to create more jobs and higher wages when you are sucking more money out of these companies and their employers?
Then consider bigger companies – Microsoft, Walmart, Apple, and FedEx, for example. More than 150 million Americans have stock ownership in these firms directly or indirectly through pensions and 401k plans for their retirement.
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The Biden plan, when you include state taxes, would leave America with one of the highest corporate tax rate in the world. It would also raise the repatriation tax, which is the money stored overseas and brought back to the U.S. We want companies to do that as the money gets reinvested here on these shores, rather than in China or Canada or the Cayman Islands.
If we are going to tax businesses, shouldn’t we be taxing companies that are located abroad, rather than creating jobs here in America? This plan isn’t just lousy economics, it is unpatriotic. It puts America last.
On the capital gains tax, Biden wants a higher tax on stock sales than at any time since the 1970s. If you tax something, you get less of it. What this tax increase does is discourage Americans of all income groups from saving and investing and taking risks in placing capital in start-up companies – that are high risk, but also offer high returns. It’s this seed capital, subject to the capital gains tax, that turns small companies into the next Google.
When you combine Biden’s corporate tax with the higher capital gains tax, you are talking about the government helping itself to as much as 60% of a company’s profits in taxes.
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Wait, I’m not done – or, I should say, Biden isn’t done. He also wants a tax on stock buy backs and a new Medicare tax on business income. Stock buy backs are one way that a company increases the value of its own company – which benefits the shareholders in the form of increasing the stock’s value.
What’s wrong with that? Add these taxes, and now the government in many cases could be eating up almost two-thirds of a company’s profits.
This would decimate the American stock market – and even perhaps cause a 1929-style stock sell-off. This plan would send trillions of dollars of investment capital overseas with Americans investing their incomes in companies domiciled in places other than America. The ruling class in Beijing is licking its chops.
It makes you wonder, is this budget plan simply economic and financial illiteracy by the Biden clan, or is it some deliberate attempt by the progressives to drive the American economy to its knees as a way of atoning for our sins?
Probably the best explanation is complete ignorance in the Biden administration of how business works.
A year ago, the group I direct, the Committee to Unleash Prosperity found that the majority of the Biden administration's top officials have ZERO business experience. They not only have never run a company, but most of them also have never even worked for a private company.
They wouldn’t know how to run a lemonade stand. And after reading this tax plan, it shows.
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