If Democrats are successful in hiking taxes on the “wealthy,” and the courts allow them to set state and international corporate tax rates, Biden and Congressional Democrats will have delivered a one-two-punch to our economy that we may never recover from.
Democrats snuck a provision into their nearly $2 trillion Covid bailout bill prohibiting states from cutting taxes for 4 years if they accept Covid money. In addition to setting state tax policies, Democrats want to set international corporate tax rates, all while calling for a massive new federal tax hike. This attempt to impose a command-and-control economy will destroy the free-markets and any hope of an economic recovery.
The provision, Section 9901 of H.R. 1319, tells states they “shall not use the funds provided under this section or transferred pursuant to section 603(c)(4) to either directly or indirectly offset a reduction in the net tax revenue of such State or territory resulting from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase.”
Americans for Limited Government Vice President of Public Policy Robert Romano believes this attempt to dictate state taxation policies is unconstitutional. “The provision blocking changes in tax law at the state level as a condition for receiving federal assistance most certainly violates states’ powers under the Tenth Amendment, as Congress here is impermissibly attempting to micromanage state fiscal policy. When this was attempted in Obamacare, which attempted to force Medicaid expansion on states via similar means, the Supreme Court rightly found it unconstitutional. President Biden and the Democratic Congress are attempting to prevent states from implementing their own stimulus package by lowering taxes in the middle of the worst recession since the Great Depression. It’s unbelievable.”
Steve Moore, co-chairman of the Committee to Unleash Prosperity and a former economic adviser for the Trump administration, told the Wall Street Journal’s Paul Gigot in an interview this week that many states have budget surpluses and want to return that money to taxpayers.
“I’ve never seen anything like this in a piece of legislation,” Moore said. “I don’t think it’s constitutional. I’m not a constitutional scholar, but how can the federal government tell the states how they spend their money, what they can do with their tax codes, again it gets back to this point that the Democrats don’t want these red states to be cutting their taxes and using that as an incentive for people to leave states like New York and Illinois and going to places like Florida, Texas.”
Moore said Nebraska, West Virginia, Mississippi, and Utah are all looking at eliminating their income tax to become more competitive, but the Covid bailout slams the brakes on that saying, “You cannot cut your taxes.”
Gigot, editorial page editor at the Wall Street Journal, added, “On the legal point, the Supreme Court has the anti-commandeering doctrine which essentially says that the federal government can’t coerce the states to do certain things. There’s a debate over what and how that that that works, because under the Constitution, states are co-sovereigns. And I would think that basically being able to set your fiscal policy is pretty core to sovereignty.”
In addition to dictating state tax rates, Democrats in Washington are making a push to set international corporate tax rates. According to a story in Business Insider this week, Treasury Secretary Janett Yellin is in active talks with other countries about setting a global minimum rate for corporate taxes.
According to Business Insider:
The US was long an outlier, with a corporate tax rate of 35% versus the international average of 24%, until former President Donald Trump’s 2017 tax cut slashed the corporate rate to 21%. But even that hasn’t stopped other countries from lowering their rates to attract multinationals. The Washington Post noted that nine countries lowered their corporate tax rate just last year.
Yellen has been clear since her confirmation hearing and subsequent press appearances that the Biden administration needs to raise new tax revenues. At the same time, she’s warned of the difficulties of implementing a wealth tax, which is favored by the progressive wing of the Democratic Party.
Part of Yellin’s “solution” is reforming the corporate tax rate — not just in the US but far beyond its borders. In addition, Yellin’s proposal would seek to eliminate the ability of any future Congress to lower corporate tax rates.
The Biden administration announced this week it will seek to fund a massive new infrastructure spending spree by raising federal taxes. Biden want to expand the estate tax’s reach, as well as taxing capital gains and dividends at an ordinary income tax rate of 39.6% for those making more than $1 million. Income tax rates would edge up to 39.6% from 37% for those making above $400,000, who would also face a 12.4% Social Security payroll tax.
While it appears the middle class will be spared from a direct tax increase, Andrew Silverman, a tax analyst from Bloomberg Intelligence said Biden’s plan to raise the corporate tax rate from 21% to 28% might have an effect on middle- and lower-income individuals.
“Raising the corporate tax rate has, in many ways, a broad economic impact,” Silverman said. “It doesn’t distinguish between large and small corporations. Taxes on corporations might reduce the amount that they can contribute to mutual funds, pension fund holders and employee stock plans, as well as how much they pay employees.”
According to Bloomberg news, the tax hikes are likely to include repealing portions of President Donald Trump’s 2017 Tax and Jobs Act that largely benefit corporations and wealthy individuals. Democrats representing New York and New Jersey are also pushing for Congress to repeal the $10,000 cap on state and local tax, or SALT, write-offs. The issue has divided Democrats because it would help high-income taxpayers, though lawmakers representing high-tax states say middle-class constituents have been harmed by the limits on the deduction.
If Democrats are successful in hiking taxes on the “wealthy,” and the courts allow them to set state and international corporate tax rates, Biden and Congressional Democrats will have delivered a one-two-punch to our economy that we may never recover from.
Since hiking taxes on the wealthy won’t raise anywhere near the amount of revenues needed to fund the grand wish list Democrat spending policies, this is just the opening salvo towards broad-based tax hikes on the middle class and even poor of this country. Can’t afford it? Well that’s just too bad for you, because this is how the Democrats have played this game with the public since the early 1900’s.
Virtually every proposed tax coming from a Democrat has always been targeted at “just the rich” (the definition of which keeps magically changing as the whim of the Democrats changes over time). So it is just a matter of time before every tax hike proposed on the so-called wealthy trickles down to everyone else. History has shown this to be true time and time again in this country over the last 100 plus years. So strap in and prepare for the government confiscation of everything you’ve worked for to begin in earnest. All in the name of “social and economic justice”.
Of course this will damage our economy and make the United States uncompetitive with the rest of the world, but the Democrats have never really cared about any of that. It’s not like they have any great love for this country anyway. They’re always complaining about how bad the United States is and how it needs to be transformed. So anything that ultimately punishes and harms America is a big plus in their book. Their focus has been squarely on the accumulation of power and wealth at the expense of everyone else and maintaining it at any cost.
You’re missing the upside on all of this tax increase concern. I am keeping track of everything since 1/21/21 – price of gas, cost of living, tax increases etc. I will submit these on my 2021 tax return as “biden’s 400K promise rebate form”. Then we can discuss it in court. Imagine if 74 million of us do this!!!!
Basketball SUPERSTAR Lebron James just might get what he’s wished for, Socialism! … Only HE’S TOO STUPID to realize that in countries living UNDER SOCIALISM/COMMUNISM, there is NO PROFESSIONAL SPORTS!!! …Why? … Because the populace HAS NO $$$ TO SPEND ON ATTENDING PROFESSIONAL SPORTS GAMES because the POPULACE ARE BEING TAXED TO DEATH to PAY FOR ALL THEIR “FREE” GOODIES!!! … Without Professional Basketball, Lebron James with his high school diploma might just have been a 6′ 9″ janitor!!! … So beware Mr James, you just might get more than you bargained for!
I want to know WHO is “pulling the strings” at the White House “. Biden is obviously and certainly incapable of doing all that is being done. He’s just a figurehead.
As if Communist China didn’t already have enough advantage, China Joe and his gang want to do more to cripple the U.S.
The Dems for years have been socialists, they just didn’t have the guts to admit it. Give Bernie and AOC some credit, at least they admit what they are, unlike the Obamas and Clintons. They are overstepping their constitutional authority, they know it and they don’t care. God help America!
This plan is socialism and another step toward marching America towards participation in one-world government. Do they think China will allow another nation to raise corporate taxes ?
Once again the Democrats are forgetting, or ignoring, “that corporations don’t pay taxes, people pay taxes.” (Paul Harvey) Any extra taxes or other expenses corporations are burdened with are passed along to the consumer, you and I.
Surprising this wasn’t discovered when Sen. Johnson required the bill to be read. I commend him for doing that. What a lowdown thing to insert into the bill!