Donald Trump has outlined his plans for federal taxation should he be elected.
‘I will make the Trump tax cuts permanent. You know they expire in a year. And we will cut your taxes even more than that,’ he said in a speech in North Charleston, South Carolina, on Feb. 14, 2024.
Trump made the direction clear. Lower.
But President Biden has also made his plan clear: He wants to wallop Americans with a $5 trillion tax increase.
Biden’s written plan calls for a small business tax hike, a corporate tax hike, a capital gains and dividends tax hike, income tax hikes, energy tax hikes and even a second Death Tax on top of the first one.
Biden would increase the corporate income tax from today’s 21% to 28%. That’s a higher tax rate than communist China and France and the U.K., each at 25%.
Now add the average state corporate income tax at 4% and the average combined Biden rate would be 32%. That would be the second-highest corporate income tax in the developed world. Just below Colombia.
Households bear the burden of the corporate income tax in the form of higher prices and slower wage growth. Companies do not simply absorb the tax, it is passed on to all of us.
Biden also promises to increase the tax on Subchapter S corporations, partnerships and all ‘pass through’ businesses, most of them small businesses, to 39.6%. These employers pay their taxes through the personal income tax rate, not the corporate rate.
Biden’s budget promises to increase the federal capital gains tax to 44.6%, the highest rate in 100 years.
California businesses would pay the 44.6% federal capital gains tax plus a 14.4% state capital gains tax for a combined rate of 59%. New York state businesses would pay a combined 53.4% on capital gains.
Meanwhile, the developed world average is 18.78%. China’s is 20%.
Under Biden you could work for 40 years, sell your business and the government could take half or more.
Biden vows to add a second death tax by eliminating stepped-up basis when parents die and pass on homes, land and stock to children.
Biden promises to impose a tax on ‘unrealized gains.’ If your land or stock account has increased in value in the last year you would pay taxes on the unrealized gain. You have not sold the property; you do not have the income. It isn’t ‘real.’ Yet you will be taxed as if you had made the sale and received the income.
Big government politicians have a habit of imposing ‘trickle down taxation,’ where a tax is advertised as only hitting ‘the rich.’ They lie in order to get the tax into law. Once in place, the tax gradually expands to hit the middle class.
Take the federal income tax. When it began in 1913, the top rate was 7%, and it only hit households making more than $15.8 million in today’s dollars. Now the income tax hits nearly half the country and the bottom rate is 10%.
Another example is the ‘Alternative Minimum Tax’ imposed in 1969. It was only supposed to hit 155 high-income households nationwide. But that’s not what happened. The tax gradually expanded to threaten 30 million households by the early 2000s.
Biden is already using ‘trickle down taxation’ to hit more and more Americans with his stock tax. Biden signed into law a 1% tax on companies that buy their own stock. This tax burden hits all Americans with a 401(k), IRA or union pension. Not even China has such a tax.
But now Biden wants to increase it to 4%: a 400% tax hike in three years. How long until it rises to 5% or 7% or 10%?
Biden is also giving away America’s tax sovereignty. He has accepted the demand of our European competitors that we set a floor under our corporate income tax rate. Europe knows that Trump has long pushed for a 15% corporate income tax.
But Trump has made it clear he wants to compete with other nations by offering lower taxes on American workers, not by paying American workers lower wages. Biden has endorsed the idea of a government tax cartel, an OPEC for tax rates no lower than 15% and Biden now demands we move that minimum tax to 21%.
Biden’s budget calls for a tax on energy used for things Biden does not like. Starting with bitcoin mining. Once in place, the list of future targets writes itself: gun manufacturing, gas stove manufacturing, and more.
Speaking of energy taxes, beware a carbon tax in a second Biden term.
Biden, Vice President Kamala Harris, Treasury Secretary Janet Yellen and Transportation Secretary Pete Buttigieg have all endorsed an energy tax/carbon tax. All but 10 Democrats in the House voted against a resolution opposing a carbon tax this spring.
And all these new Biden taxes will be collected by a supersized and unreformed IRS.