The Democratic Party’s nominating convention made history by being the first without anyone actually convening because of the coronavirus pandemic. In the new age of social distancing, the Democrat theme was “uniting America.”
An ironic undercurrent of that theme was what Fox Business News reporter Ed Rensi describes as “a harmful policy agenda that would separate millions of Americans from an opportunity to earn a paycheck.”
In fact, if the Biden-Harris ticket triumphs in November, many middle-income voters could feel the headwinds of Biden’s promised repeal of Trump 2017 tax rollbacks. Let’s explore how.
The Tax “Fairness” Issue
In a reprise of the Democrat’s favorite tax mantra “make the rich pay their fair share,” Biden will raise taxes on Americans making more than $400,000 per year. By implication that increase will include businesses as well.
“Let me tell you why I’m going to do it,” Biden said. “It’s about time they start paying a fair share of the economic responsibility we have. The very wealthy should pay a fair share — corporations should pay a fair share.”
What “fair-share” equates to is a matter of opinion, but in 2019, the federal government collected about $230 billion, or about 6.5 percent of total federal revenues from corporations. Also, the top 1 percent of income earners accounted for a little over 37.3 percent of all income taxes paid in 2019.
While we’re on the subject of fairness, how about this statistic: According to the Tax Foundation, in the bottom 50% of wage earners paid a scant 3% of all income taxes collected in 2016.
So, in the name of fairness, Biden wants to restore taxes to the Obama administration level, even though Trump’s tax cuts and deregulation sent unemployment to record low levels and the stock market soared. For working class people, the average tax liability decreased to 12.5%, 11.5%, and 10.96% respectively, depending on income.
Own a Business? Expect to Pay More if Biden is Elected
The Trump tax bill lowered the corporate tax rate from 28% to 21%. If that goes away, expect that 7% increase to be passed along to consumers.
Then there is the 20% deduction for small business owners. That plan dropped the average small business owner’s tax bill from 37% to 29.6%. If that goes away, those increases could result in layoffs of in a sector that provides thousands of jobs.
What Raising Taxes Means to the Average Wage Earner
Raising taxes is not a zero-sum game. Corporations pass increased tax costs along to their consumers. Wealthy tax payers alter their behavior in ways that affect what they buy, whom they hire, or where they invest—often to the disadvantage of others who depend on their spending. (The Biden plan, by the way, will take away Trump exemptions in capital gains taxes and eligibility for heirs to avoid a capital gains tax bite.)
Nevertheless, income taxes still don’t cover half of our government’s revenue requirements. Likewise, half of the government’s spending commitments are to entitlement spending—social security, Medicare, etc. That money is earmarked and mostly spent before one dollar in taxes is collected.
Democrats want to shore up that shortfall, take more from corporations and the wealthy and recycle the money for benefits and social programs. If they win the upcoming election, plan to pay more taxes.