Joe Biden’s massive $2 trillion “infrastructure plan” is in fact another giant tax hike disguised as a jobs program. Even worse, the Bidenites pretend that the taxes will hit wealthy people and big corporations hard, while the spending will provide jobs for struggling workers. Don’t believe any of it.
First, a reality check. Spending was up sharply last year, and will likely be up at least 50% this year. Yet, even the tax hikes now being discussed won’t come close to covering the spending increases.
Let’s review: During the pandemic year, the U.S. spent $6.5 trillion, a 47% surge in just one year. This year, we’ve already added about $4 trillion in new spending. Debt is now an unimaginable $30 trillion, and headed much higher. And yes, we have to pay it off, even if we “owe it to ourselves,” as some like to say.
With a deficit of $3 trillion last year and perhaps even higher this year, Americans are soon going to feel the pinch. Yes, the Fed can print more money by buying government bonds. But eventually, it all has to be paid back. And when that happens, the taxes will hit the economy hard, forcing the government to spend more (while crowding out private sector spending and investment), and jack up taxes at the same time.
The Biden administration’s great lie is that it will “go after” big companies and the rich to pick up the tab for the infrastructure spending.
Not true. It’s really going after you. The administration grudgingly handed out $1,400 in “COVID Relief” checks in exchange for years of higher taxes from you. Americans got snookered.
Just this week, Treasury Secretary Janet Yellen “called for countries around the world to adopt a global minimum corporate tax as part of the Biden administration’s push to hike rates and fund the $2.3 trillion infrastructure bill,” the British online Daily Mail wrote.
Some 140 countries are involved in the tax-hike talks, which will result in U.S. corporations paying a 28% top tax rate, a 33% rise from the current 21%.
Synchronized global recession, anyone?
Yet, in unveiling his infrastructure plan at a union hall in Pittsburgh last week, Biden said he would create “the strongest, most resilient, innovative economy in the world,” along with millions of “good-paying jobs.”
Uh-huh. The $2.3 trillion “Infrastructure” bill only spends $921 billion on what most people would agree is infrastructure. The remainder — $1.38 trillion by our calculation — would go to pet Democrat projects, payoffs to unions and left-wing groups, squirrelly climate change projects, money for misgoverned and impecunious Blue States, and other waste.
Because you think corporations pay for it, you might also ask, “why not?”
For one, “taxes on the companies” inevitably become “taxes on all.” Americans, you should know that by now, as we pointed out here recently.
One recent study by the Congressional Budget Office reviewed reams of past economic research and concluded that by saddling the U.S. with new taxes and enormous deficits for 10 to 15 years or even longer, we’ll destroy our economic vitality with these gigantic new spending packages.
“The general finding is that increasing taxes leads to lower GDP and personal consumption,” the CBO study, The Economic Effects of Financing a Large and Permanent Increase in Government Spending, found, adding that “deficit financing leads to higher interest rates, a lower capital stock, lower GDP, and a greater risk of a fiscal crisis.”
It also called the current trend “unsustainable.”
It could also be called “fraudulent.”
“The plan represents a huge power grab for the federal government, potentially the largest in decades,” David Ditch, a budget expert at the Heritage Foundation, told The Epoch Times. “The infrastructure portion alone would mean federal involvement in projects that are at the heart of local governance, such as school construction and water systems.”
Will a tax hike on corporations be enough? In a word, no. Last year, the U.S. collected about $212 billion in corporate taxes, well below the average $246 billion annually since 2000. Corporate taxes are highly cyclical. They don’t just keep growing.
As a simple calculation, if taxes come in at about their recent average, you’ll get only $80 billion more a year with Biden’s corporate tax hikes. But because companies are experts at tax avoidance, it’s doubtful it’ll even be that much.
That’s $1.2 trillion in corporate tax revenues over 15 years. Not $2.3 trillion.
That means the other $1.1 trillion comes from you (we’re not even counting interest). Maybe it’ll come as part of a huge, broad tax hike, already in the works. Or higher inflation. Or higher interest rates, causing prices of homes and other asset prices to fall. Or all of the above.
And don’t forget: Corporations will be raising prices, hiring less, handing out fewer bonuses and lower pay hikes, and trimming back their dividends to make up for the Biden tax hikes.
It’s a recipe for economic disaster, with trillions in lost output while we’re all paying higher taxes. Write your senator and tell him or her not to say yes to this mess. Raise hell. If not, when economic disaster comes and you start looking for someone to blame, start with the mirror.
— Written by the I&I Editorial Board