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Biden's envy-based tax hikes

Posted on: April 27, 2021 at 12:34:33 CT
Spanky KU
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https://www.msn.com/en-us/money/markets/reject-bidens-envy-based-tax-hikes/ar-BB1g5BCx?li=BBnb7Kz

President Joe Biden wants to spend more money. He also wants to raise taxes.

The argument for raising taxes in the middle of a recovery is a very thin one. And so the media, in their great zeal to promote Biden and praise his administration, have falsely attempted to frame his proposed tax hikes as a means of paying for Biden’s infrastructure, stimulus, and other plans. This assumption has no factual basis.

First of all, none of the money raised by this tax hike will be hypothecated to any specific use, so why play the silly game of claiming it is? One could just as easily say that the money is going to pay for the incarceration of disproportionately nonwhite populations, to buy the ammunition that federal law enforcement will use to shoot people in this fiscal year, to study Chinese prostitutes, or to refinance maturing federal debt.

Second, Biden’s tax hikes, unless they are altered significantly, will not come anywhere close to paying for his spending plans. Only a broad-based tax that brutally punishes the middle class could come anywhere close to bridging the gap between what the government is spending now and what it takes in. If Biden intends only to squeeze those with the highest incomes, the take will be far too small.

Moreover, it is likely that an increase in the capital gains tax rate, which Biden specifically proposes, will decrease tax revenue. Note that in 1997, when President Bill Clinton signed into law a 29% cut to the top capital gains tax rate, the resulting surge in investment and trading caused the tax to continue bringing in more revenue, not less, right up to the implosion of the technology bubble three years later. More importantly, it helped usher in a post-bubble era in which investors were far less hesitant to realize taxable long-term gains. The amount of capital gains realized annually by investors between 1997 and 2007 increased by 153%, and the amount of annual capital gains tax collected by the IRS rose by 73%, according to Treasury Department data compiled by the Tax Foundation.

A massive hike to the capital gains tax — Biden wants high-income investors to pay a combined 43% federal rate on all gains before state taxes even come into play — would create a massive disincentive for high-income investors. But this won’t significantly increase revenue. What’s more, it could depress the value of equity-based retirement portfolios held by the middle class.

Biden, similar to his free-spending predecessors, is blessed by the fact that there is no mathematical relationship between government spending and revenues — there hasn’t been in decades. This means that Biden’s tax hike and his spending plans are really totally unrelated measures. They are bound together by two considerations. First, the Senate must pass both together through reconciliation so as to avoid supermajority rules on ordinary legislation.

Second, and more importantly, Biden’s left-wing base just wants tax hikes on the rich, no matter the consequences, because its entire ideology is based on a seething hatred for and resentment of those who earn high incomes and succeed. After all, it reasons, the United States is an irredeemably racist, unfair, and evil nation. If you succeed in a place like the U.S., then the Left believes it is because you did something wrong. This is why it desires punitive taxes even if those taxes cause revenues to decrease.

This is the very definition of envy — not that you desire what your neighbor has but that you would actually be willing to give something up of your own in order to make the neighbor have less. Envy, it should go without saying, is not a sound basis for tax policy.

The economy is in the middle of a fragile recovery from the coronavirus pandemic. It needs to be given time to heal. It's never a good time to impose tax hikes based on resentment and envy, but this is an especially bad one.
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Biden's envy-based tax hikes - Spanky KU - 4/27 12:34:33




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