Over the last few months, President Joe Biden has been lauded by the liberal media over his alleged successes at both the political and legislative levels. While headlines like “‘We got it done: Biden finishes off year with pile of victories” from USATODAY and “How Biden’s legislative successes became reality” by National Public Radio (NPR) heaped praise on President Biden, the reality is that the American people were able to dodge some pretty egregious tax hikes and maintain previously passed tax cuts in the 2017 Tax Cuts and Jobs Act (TCJA) despite threats from Democrats. Here’s a list of some of the proposed Biden tax hikes in 117th Congress.
One of the biggest tax proposals that ultimately became very unpopular politically were proposed increases to the individual tax and corporate tax rates. An original version of the $3.5 trillion ‘Build Back Better’ (BBB) plan, President Biden’s signature piece of legislation, was adopted by the House and would have raised the Top Marginal Individual Income Tax Rate from 37% to 39.6%, applying to married couples making over $450,000, heads of households with taxable income over $425,000, unmarried individuals with taxable income over $400,000, married individuals filing separately with income over $225,000, and estates and trusts with taxable income over $12,500. In addition, BBB 1.0 would have increased to 25% the Capital Gains Rate from the current 20% rate.
On the corporate side the original version of BBB replaced the flat corporate income tax with the following graduated rate structure: 18% on the first $400,000 of income; 21% on income up to $5 million, and 26.5% on income thereafter. The benefit of the graduated rate would have phased out for corporations making more than $10 million.
Luckily, Americans were successful in calling on legislators to reject Democratic tax schemes and all of those proposals were scrapped.
Biden and Congressional Democrats from high local income and property tax states also sought to increase the state and local taxes (SALT) deduction from the current $10,000 cap as enacted in the TCJA to $80,000, which would have provided major tax relief for wealthy earners in high-tax states like New York, but push back from Senators including some Democrats like Senator Joe Manchin (D-WV) ultimately scrapped the increase and it was left out of the BBB 3.0 plan also known as the Orwellian named Inflation Reduction Act.
Another major tax hike that was left out of final legislation was the proposal to cut the current unified estate, gift, and GST (Generation Skipping Tax) exemptions in half, which would have wreaked havoc on family estate plans thus making it harder to pass family businesses on to the next generation. House Ways and Means Committee Chairman Rep. Richard Neal (D-MA) decided against including the estate tax provisions in the House’s BBB bill, telling Bloomberg that “enough members had raised concerns..” about the proposals.
In addition to the harmful House language, new ideas to tax businesses seemed to come from all angles in the 117th Congress. Senate Finance Committee Chairman Ron Wyden introduced his so-called “Billionaires Tax” who was only to be outdone by radical Sen. Elizabeth Warren’s (D-MA) provocatively titled “Ultra-Millionaire Tax.” Then there are the plans from House Democrats and the Biden administration, who proposed changes that would have taxed unrealized gains both annually and at death. Radical tax-and-spend Democrats threw everything at the wall, but as it stands now, the 2017 TCJA relief for family businesses remains fully intact.
The problem with almost all of these proposals is that they also rope in family owned and operated businesses who may appear “wealthy” on paper but lack the cash on hand to pay massive tax bills on illiquid assets. What the Democrats also fail to mention is that these businesses on the chopping block employ millions of Americans across the country. Big tax increases would mean a massive loss of jobs at the worst possible time for many Americans.
In the face of 40-year historic inflation over 9% last year, Washington Democrats and the White House lost a lot of public ground and political capital, especially when members of the Administration admitted faults in their fiscal policies. Nevertheless, several organizations and business groups covering a wide range of industries, family business, small and medium enterprises, trade workers, farmers, and fiscal policy hawks including AMAC Action banded together and fought back against a barrage of harmful tax hikes on hardworking American families. When you take a look at all of the tax hikes that Democrats put on the table at the beginning of 2021 when they held the White House and Congress, Americans were able to overcome 33 tax hikes to the tune of $4 trillion in total, and that’s no small feat given the Democrats appetite for more of your money.
Bob Carlstrom is President of AMAC Action.