(FamilyConservationPAC.com) – In his recently revealed budget proposal, President Biden made it obvious how he views the impending debt crisis: there is no need to reduce expenditure when you can raise taxes on Americans.
Several tax increases totaling close to $4.7 trillion were suggested by the President, including the following:
- Increase the corporate income tax rate to 28%, which is higher than the corporate rate of 25% in communist China.
- Increase the top federal tax rate to 39.6%, resulting in a combined national tax rate of roughly 45%.
- Increase the investment capital gains tax rate from 20% to 39.6%.
- Impose an unlawful wealth tax that would tax unrealized gains at a minimum of 20% for people with more than $100 million in holdings.
- Increase the tax on stock buybacks fourfold, to 4% from 1%.
- Considerable increases in energy taxes in the United States totaling $31 billion and 32% in medicare taxes from the current NIIT rate of 3.8% to 5%.
These are just a handful of the tax increases the President suggested last week. Biden’s plan consists of hundreds of pages that detail how the government will discover new ways to tax Americans, yet there are hardly any budget reductions.
In publicizing its budget, the administration has mostly emphasized how it “reduces the deficit by over $3 trillion over 10 years.” This is understandable, given that both parties are preparing for a confrontation over the debt ceiling.
Given that the GOP won’t — and shouldn’t — grant them a general debt ceiling increase, the President will likely seek to include some of these tax increases in subsequent debt limit legislation.
Of course, increasing taxes would be a bad idea if you wanted to cut the debt.
Understand the debt ceiling so you understand why it’s a crisis. pic.twitter.com/6wz1QzqKab
— PoliticsGirl (@IAmPoliticsGirl) January 20, 2023
It’s not just a risky and unsuccessful strategy to cut the deficit; it’s also a slap in the face of the American people.
To compare the effectiveness of fiscal adjustments (tax increases vs. spending cuts) in 26 different democracies from 1995 to 2018, GMU’s Mercatus Center undertook a cross-country analysis.
According to their research, spending cuts are much more effective than tax-based reforms at reducing the debt:
“A cross-country analysis of fiscal adjustments in 26 democracies was performed for 1995–2018 and found that expenditure-based fiscal adjustments are notably more successful at lowering debt levels than tax-based adjustments, with successful adjustments focusing around two-thirds on the expenditure side.
Expenditure-based adjustments tend to cause small contractions, not significantly different from zero. In contrast, tax-based adjustments cause profound and long-lasting recessions.”
Tax spikes are unsuccessful at lowering the deficit because tax hikes, by their nature, contract the economy. Companies won’t have as much money to give the government if they make less money.
Recessions are brought on by tax-based adjustments, as Mercatus explained. This is particularly troubling because most US economists have already predicted a recession.
Furthermore, many of the tax increases that Vice President Biden suggested would be passed on to consumers and pensioners, resulting in lower salaries and job losses.
For instance, the corporation tax rate is transferred to consumers through higher prices by about 30%. An estimated 70% of the corporate income tax is borne by labor (or workers) in the form of lower salaries and fewer jobs.
To be clear, the federal government contributed to the possibility of a debt default by the United States. Executives and lawmakers have recklessly invested in areas where the federal government has no business involvement.
The government nonetheless spends as wastefully as humanly feasible on the programs and activities in which it does have a genuine role.
Democrats should once again assume responsibility for the wasteful spending in Washington and develop innovative ideas to reduce it.
Taxpayers are not a limitless source of additional funds, and hard-working Americans should not be blamed for the government’s careless and sloppy blunders that led to our current debt problem.
Bail yourselves out. We’re not a cash machine.
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