The increasingly far-left Democrats and President Joe Biden seem dead set on pushing through another massive “stimulus” package of $3.5 trillion. Given the chance, they’ll make it even bigger. To pass it, they’re promising that someone called the “rich” will pay for it all. Don’t believe it.
It’s only “fair,” they say, to make “wealthy Americans” and corporations pay for all the things you want and need, especially upgraded infrastructure, improved health care, and better schools.
The best example of this mindset was this week’s viral photo of Rep. Alexandria Ocasio-Cortez in a designer dress emblazoned with “Tax The Rich” while attending a $30,000-a-plate fundraiser (above). The irony, apparently, is lost on Democrats.
The Dems’ plan, on paper at least, claims to collect about $2.9 trillion from the wealthy and corporations, mainly by raising tax rates on high-income families from 37% to 39.6%, corporate tax rates from 21% to 26.5%, and by jacking up the capital-gains tax rate from 20% to 25%.
Another $900 billion or so will come from the vague category of “taxpayer compliance,” which seems to indicate a more aggressive IRS, and from letting Medicare directly “negotiate” – that is, extort – steep cuts in drug prices by pharmaceutical companies.
If all this sounds good to you, you’re not alone. It’s a siren song that middle-class Americans have heard, and believed, before. But it’s all a lie.
Indeed, a new report from the Joint Tax Committee shows that the Biden-Democrat spending plan breaks his promise not to tax anyone under $400,000 income. The analysis found Biden’s plan would hike taxes for those making as little as $30,000 a year starting in 2027.
As we’ve previously said, virtually all of the tax hikes the government says will hit only the “rich” and “big corporations” will be paid mainly by you, a cold fact that can’t be repeated enough.
First, let’s dispose of the idea that the rich will pay all these taxes. They won’t. The reason? Despite the left’s propaganda to the contrary, the so-called rich already pay a far bigger share of total taxes than anyone else.
In 2018, the last year for which data are fully available, the top 1% earned 20.9% of all income, but paid a record 40.1% of all income taxes. That’s up sharply since 2001, when the top earners paid “just” 33.2% of total income taxes.
Indeed, the top 1% paid more in taxes in 2018 than the bottom 90%, which paid just 28.6% of taxes. The rich won’t just sit still and have more money taken from them. They have accountants and lawyers to find loopholes. It’s guaranteed, Democrats’ revenue estimates will come up far short.
What’s more, even the $2.9 trillion isn’t likely to pay for even half of the planned spending, as a recent piece by the Foundation for Economic Education (FEE) pointed out. That’s because, as estimated by the Committee for a Responsible Budget, the real spending in the Democrats’ bill is likely to total as much as $5.5 trillion over the next decade.
That leaves trillions in spending that will have to be paid for with debt, adding to our already unsustainable $29-trillion-and-rising pile of federal IOUs and permanently enlarging our massive federal government.
OK, you say, what about the billionaires, the so-called “ultra-rich”? Can’t we take their money and pay for it all? You know, a wealth tax?
FEE calls attention to a recent Wall Street Journal piece that did the math. It found even if the government “were to confiscate every asset of every American billionaire – Jeff Bezos’ rockets; Elon Musk’s bitcoin; Larry Ellison’s boats; Oprah Winfrey’s houses; Ted Turner’s ranches; Jay-Z’s car collection; even the starched shirt off the back of poor Larry Fink, who tied for last place on the Forbes list, at $1 billion – it still wouldn’t cover the cost of Democrats’ next two legislative plans.”
The point is, if the rich can’t pay for all this extravagance, how will you pay for it?
Here’s how: Even if your tax rates stay where they are, you’ll pay through higher inflation, which is a tax that benefits government, not you. Inflation has already spiked to a 20-year high, thanks to Bidenomics’ soaring government spending and the Fed’s ever-running money machine. And it’s set to go higher, shrinking both your real income and the actual value of your savings.
But you’ll also pay in other ways. Planned green taxes, rules and fees under the new infrastructure bill, for example, mean it will cost you more to fuel your car, heat your home, buy food, or buy anything made in a factory. You may think they’re going after big energy companies, but their real target is you.
Higher capital gains taxes will also hurt middle-class workers, not the rich. More than half of all American workers now own stock, either through IRAs or 401(k)s and other retirement devices, or through individual accounts.
As a recent Forbes report noted: “A study from 2016 finds that shareholders/owners bear around 40% of state corporate income taxes while employees bear 30 to 35%. So, even though corporate tax increases are not levied directly on workers, they still affect workers indirectly by lowering their wages.”
Besides, the “rich” is really just leftist code for “investors.” And when you tax investors more, as the so-called Infrastructure bill does, what do you get less of? Investment, of course. That means fewer jobs, less innovation, lower incomes, not as many choices, and higher prices for everything you buy. Punitive taxation is foolish and self-defeating.
So don’t buy the class-warfare tax-the-rich rhetoric of the left. It’s really a con game played on the middle-class by the Democrats to make the public think they’re “building infrastructure,” when in fact they’re building more government. This con will result not only in a massive, less-efficient federal government, but in more regulation, sharply lower incomes, more waste and corruption, and far less freedom to live your life as you see fit.
Promises of utopia through ever-expanding government paid for by the rich, a perennial socialist ideal, never work out. In the end, average Americans, not the rich, always pick up the tab.
— Written by the I&I Editorial Board