Biden to Impose Largest Tax Increase Since 1968

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Biden to Impose Largest Tax Increase Since 1968

The $3.5 trillion tax hike being pushed by President Biden and congressional Democrats would be the largest tax increase since 1968.
In nominal dollars, Biden’s $3.5 trillion tax increase would be the largest in history. But even when comparing this tax as a percentage of the economy, this tax hike would be the largest in more than 50 years.
While Democrats claim this tax increase will fall on “the rich," the proposal will raise taxes on small businesses and working families.
Some of the tax increases proposed by Biden and Democrats include:
1. Raising the Federal Corporate Income Tax to 28 Percent
After accounting for state corporate taxes, Biden would give the U.S. a 32 percent corporate rate, a tax rate significantly higher than communist China’s 25 percent tax rate.
This tax increase will harm working families, as a significant portion of this tax is borne by workers in the form of lower wages and lost jobs. This is not a point of contention. In a 2017 report, Stephen Entin of the Tax Foundation found that 70% of corporate taxes are borne by labor. Other economists argue that anywhere from 20% to 50%, to even 100% of the tax hits workers.
It will also harm families by increasing the costs of household goods and services. A 2020 study by the National Bureau of Economic Research found that 31% of the corporate tax falls on consumers.
This tax increase won't just hit large businesses. One million C-corporations are classified as small employers, defined by the Small Business Administration as any independent business with fewer than 500 employees.
A corporate tax increase will also threaten the life savings of families by reducing the value of publicly traded stocks in brokerage accounts or in 401(k)s. Individual investors opened 10 million new brokerage accounts in 2020 and at least 53% of households own stock. In addition, 80 million to 100 million people have a 401(k), and 46.4 million households have an individual retirement account.
Voters do not want the United States to have a higher corporate tax than China, according to polling conducted by HarrisX. After voters were informed that China has a 25 percent corporate rate, they were asked “At what level should the US set the corporate tax rate?” Among all respondents, the median answer was 21 percent.
2. Retroactive Tax Increases on Capital Gains and Dividends
President Biden has proposed doubling the capital gains tax rate. Under Biden, the average top capital gains rate will be 48.8 percent after state taxes.
In Biden’s proposed budget, it is assumed that the capital gains tax hike took effect in late April, making it a retroactive tax. The retroactive nature of this tax would cause anxiety and uncertainty, ultimately leading to severe economic damage. People make financial plans based on existing or expected policy.
This tax imposes double taxation on corporate income – first, businesses pay the corporate income tax on their earnings. Second, the investor pays the capital gains tax on dividends received or stocks when they are sold. This double taxation discourages savings, suppresses productivity, and discourages investment. Ultimately, this tax hike will threaten business creation, business expansion, entrepreneurship, and jobs and wages.
Biden’s capital gains tax hike could also reduce retirement savings. As part of his tax hike, Biden would double the tax rate on carried interest capital gains. This will harm private equity investors including the 165 public pension funds representing 20 million public sector workers.
Biden’s tax hikes could even reduce federal revenues in the short term. Because the tax only applies when a taxpayer sells the asset, a high capital gains rate discourages individuals from selling in order to delay having to pay the tax. Historically, when the capital gains tax was cut, revenue increased. When the capital gains tax is low, investment increases, stock prices increase, and revenue goes up. The inverse is of course true.
3. Creating a Second Death Tax by Repealing Step-Up in Basis
Democrats are proposing the creation of a second Death Tax by repealing step-up in basis. This will impose the capital gains tax (which Biden has proposed raising to 43.4 percent) on the unrealized gains of every asset owned by a taxpayer when they die and will be imposed in addition to the existing 40 percent Death Tax.
Repeal of step-up in basis will create new complexity for many taxpayers including family-owned businesses. It will force predominantly family-owned businesses to downsize and liquidate assets, leading to fewer jobs, lower wages, and reduced GDP.
In fact, 78 percent of small business owners say that Democrats’ repeal of step-up in basis would have crippling consequences for small businesses, according to a survey recently released by the SBE Council.
As noted by the Ernst and Young study, repeal of step-up in basis will increase the cost of capital and discourage new investment. This negative economic impact will cost 80,000 jobs each year for the first ten years, increasing to 100,000 jobs each year thereafter. One third of the tax will also fall on American workers in the form of lower wages.
Repealing step-up in basis has already been tried and failed. In 1976 congress eliminated stepped-up basis but it was so complicated and unworkable it was repealed in 1980 before it took effect.
4. Increasing the Top Income Tax Rate to 39.6 Percent
This tax increase will hit small business that are organized as sole proprietorships, LLCs, partnerships and S-corporations. These “pass-through” entities pay taxes through the individual side of the tax code. Of the 26 million businesses in 2014, 95 percent were pass-throughs. Pass-through businesses also account for 55.2 percent, or 65.7 million of all private sector workers.
More than half of all pass-through income would be taxed at this new, higher rate.
A significant portion of business income is paid through the individual side of the tax code. As noted in a Senate Finance Committee report, "in 2016, only 42 percent of net business income in the United States was earned by corporations, down from 78.3 percent in 1980."
5. Imposing a 15 Percent Minimum Tax on “Book Income”
This tax increase will create a new minimum tax on American businesses and disallow important, bipartisan credits and deductions that help promote job creation and economic growth.
The Left routinely disparages businesses that lower their federal income tax liability through the use of credits and deductions, falsely arguing that these businesses are using tax loopholes. In reality, these businesses are using a number important, bipartisan tax provisions, like research and development tax credits, full business expensing, and the deduction for net operating losses.
For instance, in 2009, Speaker Pelosi hailed legislation expanding NOLs, arguing the provision helps businesses “succeed” and “hire new people.” Similarly, President Obama pushed to expand full business expensing, arguing it would be a “strong incentive to increase investment.”
6. Imposing Global Tax Hikes That Will Make American Business Uncompetitive
Democrats have proposed several international tax increases on American businesses. They want to modify the Global Intangible Low-Taxed Income (GILTI) regime and impose a global minimum tax on American businesses of up to 26.25 percent. This would be significantly higher than the 15 percent global minimum tax rate that Biden Treasury Secretary Janet Yellen is pushing to get adopted by the G-20 and the OECD.
This will impose double taxation on American businesses and make it difficult for them to compete against foreign companies. Under Biden’s plan, an American business operating in the United Kingdom will face British taxes and then American taxes. By comparison, a British business operating in the U.S. will only pay U.S. taxes because the UK has a territorial system that only taxes income earned in that country.
In addition to higher taxes on American businesses, this new tax would be calculated on a country-by-country basis, creating significant new tax complexity for American businesses.
Democrats also want to repeal the deduction for foreign-derived intangible income (FDII). If this tax increase goes into effect, it will ship American intellectual property and jobs overseas, creating long-term economic damage to the country. This proposal would undermine American competitiveness and benefit foreign countries like China that provide extensive and generous tax credits and subsidies to incentivize IP.
As it stands, the U.S. already provides relatively modest tax benefits to IP in comparison to the generous tax subsidies provided by many foreign countries.
In fact, according to a 2020 study by the Information Technology & Innovation Foundation, the U.S. ranks 24[SUP]th[/SUP] out of 34 comparable countries in the Organization for Economic Cooperation and Development (OECD) of the four-member BRICs (Brazil, Russia, India, and China). China also recently enacted a 200 percent “super deduction” for eligible research and development expenses and has a preferential 15 percent tax rate for high-tech enterprises.
With a covid-wracked economy and rampant inflation, the last thing America needs now is an enormous tax increase.

Americans For Tax Reform - /www.atr.org/biden-impose-largest-tax-increase-1968?amp
 

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Is there another way the Entitled can raise their salaries.These people do not pay for their meals or lodging just imagine who pays for this.....
 

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Is there another way the Entitled can raise their salaries.These people do not pay for their meals or lodging just imagine who pays for this.....

Former presidential candidate John Edwards was accused of funneling nearly $1 million in donor contributions to support his pregnant mistress and criminally charged with a campaign finance violation. Here's how the case played out.​


This was/is how it happens….It's not illegal to be a pig," said Brett Kappel, a Washington campaign finance expert told The Washington Post at the time the charges were brought. "Is what Edwards did slimy? Absolutely. Everyone will agree it was reprehensible. But it's not a crime."
 

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