Over the last eighteen months, Americans have seen our Congress pass record spending bill after record spending bill, to the tune of over $6 trillion dollars now. This was partly COVID-19 emergency and relief funding but under the Democrat-held Congress, harmful changes to tax policy found their way into unrelated legislation of all kinds.
After all of that spending, President Biden is still pushing his Build Back Better plan, a wide-ranging expansion of government, tax hikes, environmental regulations, and social programs, a version of which ended up passing the House in December. The House-passed version would raise taxes on top earners, but would essentially give millionaires and billionaires a 5.4% tax break when filing in 2022 compared to current law, according to Congress’ Joint Committee on Taxation. In addition, it would raise the state and local tax deduction from $10,000 to $80,000, giving folks in blue state’s a massive windfall, while crushing small businesses by limiting the pass-through tax deduction, increasing the capital gains tax, and raising the corporate tax rate from 21% to 26.5%. It’s important to note that this would undo President Trump’s historic 2017 Tax Cuts & Jobs Act law which brought the corporate rate down to 21% in the first place. As a result, we saw historic growth in wages, annual income, stock market valuations, and reduced unemployment to historic lows across the board.
“Congress wants to dramatically expand the size of government and fund it by crushing small businesses with massive tax increases. Small businesses and their employees are struggling to recover from the pandemic and government-imposed shutdowns and mandates, and Washington’s response is to take more of their hard-earned money,” said National Federation of Independent Businesses (NFIB) President Brad Close said in a letter to Congress last year. Fortunately for small businesses across the country, Sen. Joe Manchin (D-WV) has effectively stalled the bill in the upper chamber.
President Biden’s latest idea, released in his fy2023 budget is to create a new “billionaire’s minimum tax” which resurrects the dangerous idea of taxing unrealized capital gains. For millions of Americans with retirement savings in the stock market, this plan would spell bad news for their lifetime savings. Eventually, as we have seen before with the income tax and Alternative Minimum Tax, taxes created for the wealthy end up expanding to also hit the middle class. The new tax would be nearly impossible to implement and require an army of agents to track and value assets annually, creating massive compliance costs for small businesses.
Also included in Biden’s new budget are plans to make the death tax worse for family businesses, increase marginal and corporate tax rates, and doll out special breaks and handouts for political allies. Given the combination of increased taxes, historic inflation, trillions of dollars worth of record-breaking spending, Americans are asking themselves, “is there no end in sight to Democrats pushing social tax policies without any accounting for the trillions that have already been spent?” It’s a fair question, after all, and Democrats in power will be hearing it frequently from constituents as the 2022 midterms approach.
Bob Carlstrom is President of AMAC Action