Well, you knew it was coming and coming it is. The Biden tax increases that are necessary to pay for all the programs the president is proposing are here. Philosophically, I am not really opposed to having the well-to-do pay more taxes. What I don’t like is the raises in certain taxes like that on capital gains and estate taxes. Why? Because in my mind, this money has been taxed already. The capital gains taxes derive from the selling of equities that have accrued in value usually because the business represented by the equity has done well and putatively paid its fair share of taxes. (If this is not right, fix that.) Why these already taxed value gains ought to be taxed again at the individual level is beyond me, but certainly increasing the rate to be equal to that of regular income seems excessive. Investment should be encouraged not discouraged.
As for taxes at death, all that inherited wealth has also been taxed once already. The government shouldn’t get another bite at that apple.
The only fair way to pay for Mr. Biden’s wish list is through income taxes that are graduated and progressive–paid to a greater extent by the wealthy. If that is not enough for Mr. Biden, then do a little less until you have the money to pay for your wish list. You know, like every other budget in America. A raise in gas taxes has been proposed as well to pay for roads. The problem with that is that it is a regressive tax, since most everyone has a car and has to feed it. An increase in the gas tax would hit the less fortunate hardest. It’s not as bad as a rise in sales taxes, but it’s close.
What I worry about is what happened the day after the news of the Biden tax increases leaked. The market tanked and that’s not good for the economy.
Mr. Biden, as The Wall Street Journal points out, is trying to out-Obama Obama with his liberal leanings. He must be far more selective in proposing fixes to Trump Era problems that were mostly ignored. But he can’t have everything before the 2022 mid-terms, which is what he wants as he fears, rightly, that power may shift to the GOP in November of that year and any hope for the liberal agenda will be dashed just as was the case for Obama in 2010.
Here’s what Mr. Biden needs to do and I steal this from the movie Dave.
First he must have a wholesale review of the federal budget. What is currently being paid for that is not needed. Everything is on the table from the military to the CDC. Evaluate what the people are getting for their tax dollars. See if you can find some money that way first. It may seem like diving into the sofa cushions for coins, but it would be a valuable exercise for all federal departments. If you had to make a 5% cut in your budget, could you?
Then, determine what new programs are really needed. Covid relief was an easy one. Of course, that was necessary. Infrastructure is too, but let’s limit the spending to that for real infrastructure—roads, bridges, public transportation, high-speed cable. Nothing else right now until you can find the pay for.
Next, consider the economic consequences of any new taxes. Building roads might be a net stimulus to the economy. Taxing capital gains excessively may not. Let the Congressional Budget Office run the numbers. They do it about as well as anyone.
Finally, stop listening to the extreme left wing of the Democratic Party that wants free everything. Turning the United States into Sweden is not a good idea. Some socialistic programs have proven very popular and useful—Social Security and Medicare. New ones may be less so.
I just want to believe that the sharpest minds in the country have considered the implications of new spending and new taxes. What’s really good for country? Let’s do that.