Taxes and the economy are top campaign issues that can sway voters blue or red. Democratic nominee Joe Biden has made big promises to the American public not to raise federal income taxes on earnings under $400,000. If elected, the former VP wants to increase taxes on wealthier individuals and corporations instead. However, many experts argue that Biden’s plan will stall or harm the American economy that is attempting to rebound amidst COVID-19. Bear these significant points in mind.
- It generally takes a lot of energy, long working hours, and sacrifices to earn money. What does it do to the hard work ethic, entrepreneurial spirit, and the human psyche to have the federal government swoop in to take more of our earnings?
- As people buy products and use services, they fuel the economy. By taking money out of earners’ pockets, they will be less likely to spend, invest, or reinvest in the U.S. economy. This will lead to job losses, business closures, and a decline of investments and new business ventures.
- There aren’t that many super rich people to pay down the deficit. In some states, people who earn $400,000 are in the top 1% of income earners. Thus, the “middle class” will have to bear the burden for Biden’s plan to work, if not by raising federal tax then by other means such as payroll taxes or reducing deductions. Therefore, earners below the $400,000 threshold should also be concerned.
- Closing economic gaps in jobs, wage, and wealth is a deeply socialist idea embraced by Biden that goes against principles of capitalism and lower taxes. Socialist countries do not fare well economically, whereas capitalism is proven successful. Socialists favor wealth redistribution and collective control, whereas capitalists seek less control and want you to keep more of what you earn to invest and build a robust economy.
- In a FOX Business interview, Trump warned that Biden will attempt to bring about the “biggest tax increase in history.” Biden’s plan calls for restoring the top income tax rate to 39.6% and that’s just the beginning. Once taxes are raised on Americans, it will be difficult to reverse the change. It will be a slippery slope as the government will take more and more of your money.
- Biden’s tax plan to raise the Corporate tax rate from 21% to 28% would increase the cost of making investments, leading to less capital formation, and resulting in fewer jobs and lower wages for Americans. This would make American companies less competitive worldwide.
- Biden wants to use portions of tax money collected to increase and extend federal government programs. Yet, many established programs run by the federal government are difficult to maintain successfully or squander taxpayers’ money.
- In addition to increasing federal income tax on wages $400,000 and above, Biden aims to impose yet another tax on them; a 12.4% Social Security payroll tax, assumed to be half paid by the employee, half paid by the employer. Furthermore, this can be modified to capture taxes from a larger group of people, mainly the middle class.
- Biden says that people who earn over $400,000 need to “pay their fair share.” However, folks at that earning level aren’t necessarily “rich.” In most instances it takes years of hard work to achieve that income level. Look at a married couple who earn $400,000 per year in combined income. Currently, they pay $80,000 in federal income tax, with additional state, city, and local taxes of $29,000. Next, there is Social Security at $14,000 and Medicare taxes at $8,500. Note that these tax amounts do not include living expenses such as mortgage or rent, car payments, insurance, childcare, food and clothing, additional medical expenses, college debt, investments, and retirement savings, and so forth. Of that $400,000, taxes already make up a whopping $131,500. Is that not already their “fair share”? After all, the government is taking nearly 33% of their income before Biden’s tax plan to take more. Where will he draw the line?