The news about Silicon Valley Bank’s collapse has been getting a lot of attention lately, but there’s another important event that it’s overshadowed.
President Biden recently released his budget, which includes a list of tax increases that could have a big impact, and it’s catching a lot of heat from economic experts and members of Congress.
Former senior economic adviser during the Trump administration, Steve Moore, calls the budget proposal a “fiscal atrocity.”
Sen. John Kennedy (R-LA) criticized the $6.8 trillion proposal, saying that the only way to improve it would be “with a shredder.”
JUST IN: The only way President Joe Biden's proposed $6.8 trillion budget proposal can be made better is "with a shredder," Sen. John Kennedy commented Sunday. https://t.co/ub7rPi4P0M pic.twitter.com/7GHhSSWZKv
— NEWSMAX (@NEWSMAX) March 12, 2023
Here are a few things on Biden’s wish list:
Biden is proposing a significant increase in the top income tax rate, making it the highest rate since 1986. If approved, the top income tax rate would increase from the current 37% to 45%.
This would undo a bipartisan tax reform effort from 1986 that lowered all rates and established two rates of 15% and 28%, led by Sen. Bill Bradley (D-NJ) and Rep. Dick Gephardt (R-MO), along with President Ronald Reagan.
Biden has proposed a significant increase in the federal capital gains tax rate for investments, which would nearly double from the current 20% to 39.6%. In addition to this federal tax, the average state tax on capital gains is 5.4%.
Obamacare already adds an additional 3.8% tax on capital gains, which means that states like California could see their total capital gains tax rate (federal and state) approach 60%. This proposal has sparked controversy, with some economists warning that it could have a negative impact on investment and economic growth.
Biden is proposing a hike in corporate income tax from 21% to 28%, which is higher than China’s current rate of 25%. Biden’s plan would increase the combined federal and state corporate tax rate to around 32%, which would be the highest business tax rate in the developed world.
Biden’s budget proposes taxing “unrealized gains.” Currently, taxes on capital gains are imposed when they are realized. This means that taxes are paid when you sell a house, land, collectibles, or stocks.
The budget also proposes an increase in the tax on stock buybacks, resulting in a tax increase on IRAs and 401Ks.
In 2022, Congress enacted a tax of 1% on companies that buy back their own stock held by others. This is known as a stock buyback and shows confidence in a company’s future.
President Biden originally sold this tax as only being 1%. However, he now wants to increase it by 400%. This leaves people wondering if this increase will be the first of many.
President Biden’s administration may argue that some of these proposed taxes target only the wealthy or big corporations, but businesses always pass additional costs along to consumers.
According to a recent article by political contributor Grover Norquist at Bizpac Review, Biden’s tax policy should be summed up with the phrase, “I will tax the rich first. Then you.”