Month: July 2024

As part of an extensive package of tax increases, Biden proposes eliminating the Trump Tax cuts.

Contrary to the White House claims, preserving the Trump tax cuts will not starve the federal government’s income.  House Ways and Means Chairman Jason Smith (Missouri)notes that “The truth is, the Trump tax cuts resulted in economic growth that was a full percentage point above CBO’s forecast, and federal revenues far outpaced the agency’s predictions. In fact, under Trump tax policies in 2022, tax revenues reached a record high of nearly $5 trillion, and revenues averaged $205 billion above CBO predictions for the four years following implementation of the law. Beyond what the Trump tax cuts did for economic growth and federal revenues, it provided major benefits to working families. The officially reported poverty level fell to its lowest rate in 50 years and unemployment rates for minorities and those without a college degree hit all-time lows. Real median household income rose by $5,000, and wages went up by nearly 5 percent. Americans earning under $100,000 saw an average tax cut of 16 percent. And while the tax burden on low-income families went down, the top one percent saw their share of federal taxes go up…On the other hand, President Biden’s promise for the expiration of the Trump tax cuts, means a family of four making $75,000 today will owe Uncle Sam an extra $1,500 in taxes. The Child Tax Credit will be slashed in half; small businesses will see their tax rates top 40 percent; and farmers may have to weigh selling the family business to pay a rising death tax. In his budget, President Biden has called for upwards of $7 trillion in new taxes.”

The Tax Foundation estimates that the “…tax changes in the president’s budget would reduce long-run GDP by 2.2 percent, the capital stock by 3.8 percent, wages by 1.6 percent, and employment by about 788,000 full-time equivalent jobs. The budget would decrease American incomes (as measured by gross national product, or GNP) by 1.9 percent in the long run, reflecting offsetting effects of increased taxes and reduced deficits, as debt reduction reduces interest payments to foreign owners of the national debt. Raising the corporate income tax rate to 28 percent is the largest driver of the negative effects, reducing long-run GDP by 0.9 percent, the capital stock by 1.7 percent, wages by 0.8 percent, and full-time equivalent jobs by 192,000.”

A CATO analysis presents a grim description of what the tax hikes would result in. “The Biden tax hikes would primarily fall on capital income, leading to less domestic investment, fewer jobs, and slower economic growth. According to estimates from the Tax Foundation, the budget proposal would reduce long‐​run GDP by 2.2 percent, hurt wages, and eliminate 788,000 jobs. This is likely a significant understatement of the negative economic effects. The analysis notes that the budget’s proposals will make America an international outlier on individual and corporate taxes…The United States currently exceeds the OECD average in all four tax measures. The charts also show that under Biden’s budget proposals, American tax rates move from just above average to an outlier nation, with some of the highest tax rates in the OECD.”

The American Enterprise Institute emphasizes that “Although his proposals would raise significant revenue, they would not significantly affect the federal government’s short-run and long-run debt burden… in the long term, his plan would not raise enough to stabilize debt-toGDP and would lead to a 0.2 percent smaller economy.”

Illustration: Pixabay

President Biden’s tax proposals, including allowing the Trump tax cuts to expire, will have a profound and damaging impact on an economy already reeling from the inflationary effects of both his energy policy and his extraordinary spending. 

The U.S. Treasury summarizes Biden’s proposals:

Raise corporate income tax rate to 28%, Increase the corporate alternate minimum tax to 21%, Increase the excise tax rate on repurchase of corporate stock and close loopholes, Tax corporate distribution as dividends, Limit tax avoidance, Limit losses recognizes in liquidation transactions, Prevent basis shifting by related persons through partnerships, Conform definitions of “control” with corporate affilitiation test, Strengthen limitation on losses for noncorporate taxpayers, Expand limitation on deductibility of employee renumeration in excess of $1 million, Revise the global minimum tax regime, limit inversions, Adopt undertaxed profits rule.

Providing Washington with more revenue will neither balance the budget nor reduce the federal deficit, in the same manner that giving more booze to an alcohol will not end his addiction. Washington has accumulated more income than ever, but continues its deficit spending. The House Ways and Means Committee found that In fiscal year 2022, federal tax revenues reached a record-high of $4.9 trillion. Corporate tax revenues reached a record-high of $425 billion – $128 billion or 43 percent higher than when the Trump tax cuts were passed and $72 billion higher than CBO’s projections for 2022.

Individual tax revenues reached a record-high of $2.6 trillion – over $1 trillion or 66 percent higher than when the Trump tax cuts were passed and $642 billion higher than CBO’s projections for 2022.

On average, revenues increased $205 billion per year over CBO’s projections.

In the first two years after passage of the Trump tax cuts, GDP growth was a full percentage point higher than CBO’s pre-TCJA forecast.

According to the White House Office of Management and Budget, every additional one percent of sustained GDP growth will result in $600 billion in new revenues over 5 years and $2.8 trillion over 10 years.

Following passage of the Trump tax cuts…

Real median household income rose by $5,000 – a bigger increase in just two years than in the prior eight years combined. 

Wages increased 4.9 percent, the fastest two-year growth in real wages in 20 years. 

The poverty rate and unemployment rate reached their lowest levels in 50 years, with all-time lows in unemployment among African American and Hispanic workers, and those without a high-school degree.

The bottom 20 percent of earners saw their federal tax rate fall to its lowest level in 40 years.

Americans earning under $100,000 received an average tax cut of 16 percent.

The share of taxes paid by the top 1 percent of households increased while the tax burden paid by lower income earners decreased.

Allowing the Trump tax cuts to expires will mean higher taxes on working families and businesses, including…

A family of four earning $75,000 will owe an additional $1,500 in taxes.

A family of five with two earners making around $100,000 will owe an additional nearly $7,500 in taxes.

The Child Tax Credit will be slashed in half from $2,000 down to $1,000.

The guaranteed deduction that 90 percent of taxpayers use to simplify their tax filing will be slashed in half.

The 20 percent deduction that helps small businesses compete with larger corporations goes away leaving small businesses facing a 43.4 percent tax rate.

There have been no changes to CBO’s methodology to address other miscalculations…

For fiscal year 2023, CBO under projected the budget deficit by $1 trillion.

The green tax provisions in the Inflation Reduction Act (IRA) were originally estimated to cost $400 billion through FY 2031. This has since been revised up by two-thirds, to about $660 billion through FY 2031 or $790 billion through FY 2033.

The article concludes tomorrow

Illustration: Pixabay

As Americans celebrate the 248th anniversary of the Declaration of Independence, it is startling to realize that progressives, an influential political grouping that dominates the Democratic Party, Hollywood, most of the media, and even education, would have sided more with King George III rather than George Washington.   Their attitude towards the Revolution, its beliefs and even its symbols which brought about the greatest advance in human freedom in history, is disdainful.   They have rejected the concept of individual rights, preferring that edicts from unelected bureaucrats from federal agencies take precedence over most aspects of our daily lives. They believe that expressions of beliefs should be subjected to partisan officials who will determine what is and is not “disinformation,” really just a code word for censorship. They believe that the right of self-defense, so valiantly displayed at the fields at Lexington and Concord where the Revolution began, should be repealed. Today, the battlefields are in stores and streets, where innocent civilians and store owners get in more trouble for defending themselves from robbers and rapists than the criminals perpetuating heinous acts.   They reject the basic attributes of Independence itself. They endorse the concept that international treaties have more weight than the Bill of Rights. The open borders so vehemently commenced by President Biden in violation of existing laws, is really a rejection of American sovereignty itself. Their belief that the U.S. must provide for the world population is really a statement that American citizenship is an illusion. Throughout the nation, the stunning cost of feeding, housing, medicating, and educating illegals have bankrupted cities, sharply diminished services and public safety, and ejected American veterans from homeless shelters, and American children from parks. In a number progressive jurisdictions, moves are being made to grant noncitizens the right to vote, the ultimate rejection of American nationhood.   The heroes of the Revolution are under constant attack.  Just one example: The New York City Council’s statue of Thomas Jefferson was removed, a decision made by the municipality’s Public Design Commission at the urging of progressives.   The symbols of the Revolution are under no less assault. President Obama demanded that the Famous “Don’t Tread on Me” flag, a symbol of defiance by the colonists against foreign domination, be removed from Naval vessels.  In recent days, another Revolutionary war banner, the “Appeal to Heaven” flag, was removed from the San Francisco Civic Center Plaza. According to National Review, the banner dates “back to 1775 [and] was flown on George Washington’s ships during the Revolutionary War. It was formally adopted for the Massachusetts navy’s use a year later. In some American schools, Marxist screeds such as Howard Zin’s text on American History and the “1619 Project” have been placed in curriculum, ignoring or downplaying objective texts on the Revolution. Historian Larry Schweikart argues that many history textbooks now employed by progressive educators distort Revolutionary war history to push a progressive agenda. He argues that as a result, students graduate from high schools with “twisted beliefs” about America’s origin and the foundations of the Republic.  The concept of a nation founded on the principle of individual rights was a startling change in the course of the human story. Monarchs, emperors, dictators, military strongmen and more had been the norm. Only a few times had only a very limited version of individual rights even been tried.  The American Revolution changed that to a stunning degree. As the progressive philosophy of collectivism over personal freedom gains greater influence, the guiding  philosophy of personal rights that the Revolution succeeded in achieving becomes a target.  Once more, the American people have to decide on American Independence.