Taxed Enough Already
The Democrats’ plan to raise taxes will impact millions more Americans than they claim.
It has been said that the definition of insanity is doing the same thing over and over again and expecting a different result. Take, for instance, the Democrat Party. Time and again, from the unholy birth of the 16th Amendment that gave us the federal income tax to the incessant growth of the cradle-to-grave entitlement state since the New Deal, the Democrats have continuously insisted that raising taxes is good for the economy. There has never been a recorded instance of this being true, yet today we stand again on the precipice of a major tax hike that threatens to turn our fragile economy upside down.
As in all the previous instances, the Democrats are promising to pay for a new wave of goodies — mostly entitlements and supposed green energy investments to politically friendly companies — with tax hikes on the rich and on corporations.
This is what their new tax plan has in store. A tax hike on high-income individuals combined with a 5% surtax on earnings above $10 million and an additional 3% surtax on income above $25 million. These surcharges will also impact non-wage earnings like capital gains, property and estate sales, and non-liquid income. Provisions on corporations include a 15% corporate profits minimum tax, a 1% tax on corporate stock repurchases, limitations on interest deductions for international companies, and a host of other new restrictions on corporate filings.
These provisions, if enacted, will make America’s top tax rate the highest among all Organization for Economic Cooperation and Development (OECD) countries. Right now, the U.S. ranks in the second tier, with a total federal and state tax burden of 42.9%. The OECD average is 42.6%. Assuming all the taxes that the Left wants come to pass, the U.S. top tax rate would reach 57.4% by 2026. America likes being number one, but this is not a top spot worthy of boasting.
And it won’t stop there. It never does. Let’s not forget that the current $1.75 trillion Build Back Better plan was originally a much larger package. The sticker price was tagged at $3.5 trillion, but even socialist Bernie Sanders admitted that the true price for the package was around $6 trillion. The idea is to spend just enough money to put the programs securely in place, then turn back to the taxpayers in a couple of years and ask for more money. Well, “ask” is really a relative term. After all, in the leftist view, income is only what the government allows you to keep after it takes what it pleases in taxes.
It’s a classic bait-and-switch, and you need only go back as far as ObamaCare to see the mechanics in action. There are few things tougher to kill than a government program. Democrats know there isn’t enough money to pay for what they’re proposing, but they’re counting on duping taxpayers down the line to keep these wasteful, ineffective entitlements afloat.
Democrats don’t see, or don’t care, what the impact of these taxes will be. They recently went so far as to propose a tax on billionaires’ unrealized capital gains, i.e. money they haven’t made yet. These schemes have real consequences for the economy that go far beyond a rich person’s wallet.
Market analysts have noted that Democrat Senator Ron Wyden’s pre-income tax will end up depressing the stock market, which hurts millions of invested Americans. Large-scale investors will be discouraged by the tax from investing in stocks. This will reduce the number of investors, which will discourage IPOs and make companies reticent to go public, and it will make the stock market less attractive to smaller-scale investors, like families looking to make some investments toward retirement.
Likewise for the higher taxes and surtaxes on the nation’s top earners and corporations. In a high-tax environment, they will reduce their investments in the U.S. and take their money to other places. Reduced spending will have an adverse effect on lower-income earners whose livelihoods depend on the rich spending their money. This includes people who work in the luxury goods business, home builders, estate caretakers, nannies, drivers, private tutors, the list goes on. And don’t expect corporations to just take higher taxes on the chin. Those costs always filter down to the consumer in the form of higher prices for goods and services.
The American economy is fully integrated, something leftists should appreciate if their racial rhetoric is to be believed. Anything that has an impact on one sector will eventually impact everyone. It is a good system because in good conditions, everyone can benefit. But in bad times, like when the government engages in class warfare, everyone loses.
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