After doling out a few grand to Americans who mostly don’t need it, the Biden Administration and its left-wing allies in the Senate are prepping for tax increases to pay for an infrastructure program (read Green Energy Boondoggle). Biden wants to take back Trump’s corporate tax cuts, as well as hike rates on high-income earners (but dump the limit on state and local taxes that benefit high-income earners in blue states the most). And in a truly asinine move, he wants to hike the capital gains tax rate to the ordinary income tax rate for those making over $1,000,000. That’s an increase from 23.4% to 43% under his plan.
Somebody needs to point out to the tax-hiking crusaders in the administration and congress that the capital gains rate is the easiest tax rate to doge. Higher rates are unlikely to generate higher tax revenue, but they will definitely create perverse incentives and distort the allocation of capital that is vital to a thriving economy. The Republicans could guarantee a drop in revenue by promising to eliminate the capital gains rate as soon as they have the power to do so. Investors subject to such a confiscatory tax would likely hold onto their winners until the rate is eliminated.
A former wise president might have said, “These are loser moves!”
You can read more about the Senate’s tax-hiking scheme from here from Richard Rubin in The Wall Street Journal:
Democrats in Congress began building the policy case for sharp corporate-tax increases, arguing that Republicans went too far with their 2017 tax cuts.
Sen. Ron Wyden (D., Ore.), chairman of the Senate Finance Committee, said he and Sens. Sherrod Brown (D., Ohio) and Mark Warner (D., Va.) will soon release a more detailed framework for how multinational corporations should be taxed.
Sen. Bernie Sanders of Vermont, the Budget Committee chairman, released a plan Thursday that would raise $1 trillion over a decade. Sen. Elizabeth Warren (D., Mass.) said she is writing legislation to impose a minimum tax on profitable companies. Versions of some of those ideas are expected to appear in the tax-and-spending agenda that President Biden will unveil next week, and Congress is poised to act on them this year to help pay for infrastructure spending.
In all, Democrats are planning significant reversals of the 2017 tax law signed by then-President Donald Trump, though they aren’t calling for returning to the previous status quo. They are particularly eyeing features of the law that they say give companies incentives to move activity outside the U.S.
Read more here.