CV NEWS FEED // Despite President Joe Biden’s frequent promise not to raise taxes “one penny” on Americans making less than $400,000 a year, experts are warning that his new budget does just that by passing down hidden costs.
According to tax analysts, the “not one penny” promise that Biden has frequently made on the campaign trail and in the White House will prove to be empty rhetoric once working class and middle-income Americans realize what it costs them.
Erica York, an economist with the non-partisan Tax Foundation’s Center for Federal Tax Policy, told InsideSources on Thursday: “The $400,000 pledge is simply not workable. It might fly by political standards, but it doesn’t by economic standards. We don’t yet have details on the exact proposals lawmakers are going to use to pay for the reconciliation bill, but it will likely include business tax increases such as a higher corporate income tax rate.”
The Tax Foundation’s analysis shows costs rising in nearly every congressional district from 2022 to 2031, primarily as a result of Biden’s proposed corporate tax increases that seem likely to wind up in the final legislation.
Thomas A. Barthold of the Joint Committee on Taxation (JCT), the nonpartisan scorekeeper for Congress, recently lent credence to these concerns in an Aug. 3 memo reporting that the proposed corporate tax hikes would raise taxes for tens of millions of taxpayers making under $100,000 per year, and tens of millions more making under $400,000 per year.
Libertarian tax analysts told CatholicVote.org that they concurred with their progressive and conservative colleagues that the middle class will experience hidden taxes from Biden’s deficit spening, and not only because of the corporate tax hike.
Chris Edwards, director of tax policy studies at the Cato Institute, said the Biden proposal would raise government debt in a way that could raise taxes for households at all income levels and push up inflation, “which is a harsh tax on those with moderate incomes.”
“The burden of the higher corporate tax would land on workers and shareholders at all income levels,” Edwards said. “Higher taxes will reduce economic growth, and thus suppress wages, similar to a tax increase.”
John Berlau, a senior analyst with the Competitive Enterprise Institute, said that both Biden’s American Families Plan submitted to Congress in April and recently-introduced legislation by Senate Finance Committee Chairman Ron Wyden (D-OR) could be templates for the forthcoming infrastructure reconciliation bill — a problematic scenario since they contain no asset or income threshold for the new “carried interest” tax.
“So firms from venture capital houses to doctors’ offices to family farms, all of which are often structured as partnerships, could be negatively affected,” Berlau said, citing a blog he recently wrote on the subject for CEI.
In the infrastructure bill that just passed the Senate, Berlau also noted he had raised concerns about the cryptocurrency tax reporting provisions that ended up outraging grass-roots crypto holders.
“A bipartisan amendment to modify the provision failed to get unanimous consent, so unless the language is changed in the House, it will be in the bill when it reaches Biden’s desk,” he said. “While not a specific tax on cryptocurrency holders, the reporting provisions as written would likely apply to not just brokers but to individuals doing cryptocurrency mining from their home, apartment and dorm room. And there is no income threshold exempting those who make less than $400 k from this provision. The costs – including a severe disruption in the cryptocurrency industry – would also hit cryptocurrency holders who make less than $400,000 a year.”
Howard Gleckman, senior fellow for the left-leaning Tax Policy Center at the Urban Center and Brookings Institution, wrote in a June 17 column for TaxVox that 75 percent of middle-income households would see their after-tax income fall under the Biden plan.
“On average, middle-income households still would get a tax cut, though it would fall to about $300,” Gleckman wrote. “That’s mostly because, as workers, they’d bear some of the burden of those corporate tax hikes through lower wages. But about three-quarters of those households would see their after-tax incomes fall compared to current law.”
Even though high-income taxpayers would still pay most of the costs, Gleckman noted that the likely net loss for middle-class Americans could wake them up from the illusion that corporate taxes don’t impact their households, making future Republican attacks more credible.