List of Tax Hikes in Biden’s Budget
List of Tax Hikes in Biden’s Budget
Joe Biden by Gage Skidmore is licensed under CC BY-SA 2.0
President Biden’s Fiscal Year 2024 budget proposal contains nearly $4.7 trillion in new tax hikes on American individuals and businesses. Biden’s proposed tax hikes come just months after Democrats passed more than $700 billion in tax increases in the so-called Inflation Reduction Act.
Biden’s budget proposal is a direct violation of the President’s campaign pledge to not raise taxes on small businesses.
Below is a list of tax hikes included in Biden’s budget proposal. This list will be updated as more details of Biden’s Budget become available.
Highest Personal Income Tax Rate Since 1986. Biden’s budget calls for a top combined federal tax rate of about 45%, the highest since 1986 when “Walk Like An Egyptian” was the number one song and the first Top Gun movie was released.
Highest Capital Gains Tax Since 1978. A rate over twice as high as China’s capital gains tax rate. Biden’s plan nearly doubles the capital gains tax rate for investment to 39.6% from 20%. The U.S. currently has a combined capital gains rate of over 29 percent, inclusive of the 3.8 percent Obamacare tax and the 5.4 percent state average capital gains rate. Under Biden, this rate would approach 50 percent. This would give the U.S. a capital gains tax that is significantly higher than foreign competitors. Blue states such as California would see capital gains rates above 60%.
Corporate Tax Rate Higher than Communist China. A 31% increase, from 21% to 28%.
President Biden raises the current 21% federal corporate income tax rate to 28%, higher than Communist China’s 25% rate. (Note: Industry sectors of strategic use to the Chinese government pay an even lower rate of 15% or 10%.)
After adding state corporate income taxes, the combined federal-state rate under Biden amounts to about 32%.
American workers would bear the brunt of Biden’s corporate tax increase.
The non-partisan Joint Committee on Taxation affirmed in congressional testimony that corporate tax rate hikes would hit “labor, laborers.“
This tax increase will be passed along to families in the form of higher prices of goods and services. For instance, a 2020 study by the National Bureau of Economic Research found that 31% of the corporate tax falls on consumers. In addition, a corporate tax increase will harm workers in the form of lower wages and fewer jobs.
Unconstitutional Wealth Tax on Unrealized Gains
Biden’s budget calls for an annual 20 percent minimum tax on the unrealized gains of individuals with income and assets that exceeding $100 million. This same proposal was included in Biden’s previous budget plan and estimated to be a $360 billion tax hike.
This tax is just the latest attempt by the Democrats to reshape the tax code and pass a tax on unrealized gains. This new tax is similar to the wealth taxes pushed by radical progressives such as Senator Elizabeth Warren (D-Mass) and Bernie Sanders (I-Vt.).
Capital gains taxes should only be paid when an asset is sold. Biden’s proposal would break with current tax policy and tax Americans based on the value of an asset on a particular arbitrary date.
This unprecedented tax would empower the IRS, encourage taxpayers to move assets overseas, and could grow to hit millions of Americans over time. It would also harm the economy, impose retroactive taxation, has failed everywhere it has been tried before, and would likely be struck down by the Supreme Court as unconstitutional.
Quadrupled Tax on Stock Buybacks. This tax will hit every American with a 401K or IRA or union pension.
Democrats imposed a 1% stock buyback tax on January 1. Now just months later, President Biden’s budget calls for quadrupling the tax, the burden of which hits every American with a 401k, IRA, or union pension.
The U.S. stock market just had its worst year since 2008 – ending the year 2022 down 20%. Biden’s answer is higher taxes. Raising taxes and restricting buybacks would harm the 58 percent of Americans who own stock and more than 60 million workers invested in a 401(k). An additional 14.83 million Americans are invested in 529 education savings accounts.
Quadrupling the buyback tax, would stifle U.S. employers and put Americans at a competitive disadvantage vs. China, which does not have a buyback tax.
$31 Billion Tax on American Energy
Biden is calling for a new taxes on oil and gas companies totaling $31 billion. These tax hikes will be passed on to consumers in the former higher gas prices and energy bills. This tax hike on American energy comes on the heels of Democrats passing roughly $20 billion worth of new energy taxes included in the Inflation Reduction Act.
32% Increase to Medicare Taxes
Biden proposes raising Medicare taxes from the current rate of 3.8 percent to 5 percent for individuals making over $400,000 per year. roughly a 32 percent tax hike. The plan reportedly broadens the Net Investment Income Tax to apply to business income as well as investments, wages and self-employment income. Previous estimates from the Committee for a Responsible Federal Budget estimate this to be a $200 billion tax hike.
As noted by WSJ, this tax hike combined with the increase in the marginal income tax rate would saddle the U.S. with the highest income tax rate in decades:
“If Mr. Biden again proposes raising the top marginal income tax to 39.6% from 37%, he would be seeking a combined top federal tax rate of 44.6%, higher than at any point since the mid-1980s. If that became law, the combined marginal tax rate on top earners would exceed 50% in many states.“
To honor his small business tax pledge to the American people, Biden must forego the above tax increases.
Carried Interest Tax on Capital Gains
While the Left labels carried interest as a “loophole” it is actually based on longstanding tax principles. Raising taxes on carried interest capital gains should be rejected. It is a terrible tax policy that would harm economic growth, reduce jobs, and reduce the returns of public pension funds across the country.
Even Sen. Kyrsten Sinema (I., Ariz.) rejected Democrats’ attempt to raise taxes on income from carried interest last year by blocking this proposal from being included in the Inflation and Reduction Act.
This tax hike would hit private equity, venture capital, real estate partnerships, and their portfolio companies which together account for over 25 million American jobs. In response, firms would downsize and decrease investment, causing both a loss of jobs and a reduction in the returns investors see.
$23 Billion Retirement Tax
The budget proposal calls for capping the retirement plan benefits of certain individuals. The White House projects this limitation on retirement benefits will raise $23 billion in taxes from individuals with retirement account balances above $10 million and earnings above $400,000.
$24 Billion Cryptocurrency Tax
Biden plans to raise taxes on cryptocurrencies by $24 billion by changing the tax treatment of their transaction by applying “wash sale” rules.
Under current IRS rules, a wash sale occurs when an investor sells “stock or securities” at a loss, and either 30 days before or after the sale, purchases a “substantially identical” stock or security. The IRS prohibits any deduction of losses when a transaction like this occurs.
Biden wants to apply this rule to crypto transactions. This will limit crypto investors’ flexibility to deduct losses. What makes this issue more complicated is that Congress and federal regulators have so far failed to develop the rules of the road for determining whether crypto assets are commodities or securities. Digital assets are diverse and do not necessarily function like securities and should not necessarily be treated like them.
Real Estate Tax Hike
Biden proposes raising taxes on capital gains from real estate transaction by ending what are knows as 1031 Like-Kind Exchanges.
Under current tax rules, real estate investors can exchange real property used for business for similar real property and defer capital gains tax. Biden’s proposed changes to this tax treatment will hurt individuals and farmers. Many of Biden’s constituents have previously claimed that “those who rely most on section 1031 aren’t large corporations, but individual Americans who own investment property, from urban apartments to farms to forests.”
Doubles the Global Minimum Tax
The plan calls for doubling the tax on Global Intangible Low-Tax Income (GILTI) from on U.S. multinational corporations from 10.5 to 21 percent, which after the disallowance of foreign tax credits would provide a top rate of 26.25 percent.
Biden’s proposed changes to GILTI would lead to a $340 billion tax hike over the next decade, could eliminate one million jobs and cause $20 billion in lost economic activity, according to a recent EY report published by the National Association of Manufacturers.
As the report explains, Biden’s proposed GILTI tax increase could result in anywhere from a 200,000 to 3.1 million loss in jobs. The report estimates the most likely employment loss is approximately 1,000,000 lost jobs. Additionally, the changes would cause a decline in investment ranging between $10 billion and $20 billion. This is because the tax hike increases the cost of capital, making investing less profitable.
GILTI was created by the Tax Cuts and Jobs Act of 2017 and was included in the bill as a tradeoff for other tax cuts including ending the double taxation of American businesses and reducing the corporate tax rate to 21 percent, a rate in line with the rest of the developed world.
https://www.atr.org/list-of-tax-hikes-in-bidens-budget/
”The trouble with socialism is that you eventually run out of other people's money.” - Margaret Thatcher
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Originally Posted by Achilles
