EDITORIAL: Biden tax plan would pummel average Americans
President Joe Biden’s 2025 budget blueprint won’t become law, but it provides a glimpse of what the nation can expect if he wins re-election and Democrats gain control of Congress. Middle-class Americans frustrated by the rising prices triggered by Bidenomics should be prepared for more of the same.
Mr. Biden’s budget, unveiled in March, spends at a record pace. The debt would continue to soar, and trillion-dollar deficits would become the new norm. This despite billions in higher taxes. The president has vowed not to increase taxes on those who earn less than $400,000 a year, but the practical effect of his efforts to jack up corporate rates would be to separate all Americans, regardless of income, from more of their hard-earned money.
The Biden plan is straight out of the Bernie Sanders handbook: Go after the evil capitalists. Mr. Biden seeks to increase the U.S. corporate tax rate by one-third, to 28 percent. In addition, he proposes a 40 percent leap in the corporate alternative minimum tax.
This plays well in populist and progressive circles, where economic literacy is often in short supply. But corporations don’t pay taxes. They collect them from those who purchase their goods and services.
“When the corporate tax rate increases,” Phil Gramm and Mike Solon wrote in an op-ed this week for The Wall Street Journal, “corporations try to pass the cost on to consumers. To the degree that the entire cost of the tax increase can’t be passed on to consumers, those costs are borne by employees and investors.”
And who are those investors? The writers report that, according to TaxNotes, “72 percent of the value of all domestically held stocks is owned by pension plans, 401(k)s, individual retirement accounts and charitable organizations” or life insurance companies. In other words, vehicles upon which many average workers depend for their long-term benefit.
Mr. Gramm and Mr. Solon cite a recent Treasury study that found that almost half of all U.S. families “pay more in corporate taxes than they do in individual income taxes.” This means, the authors point out, that Mr. Biden’s corporate tax plan would cost low- and middle-income Americans more money than if Congress raised their income tax rates.
Republicans would do well to pound away on these economic realities in the upcoming campaign. They might also highlight how these corporate tax proposals are brought to the American people by a president who created the stifling inflation with which families have struggled for the past few years — inflation that Mr. Biden never saw coming.