President Biden’s Budget Shows He Will Let Middle Class Tax Cuts Expire
Hidden inside President Biden’s Fiscal Year (FY) 2025 Budget is the revelation that he will increase taxes by a whopping $7 trillion, thanks to a range of tax increases and the expiration of Republicans’ 2017 tax reform. Ways and Means Chairman Jason Smith (MO-08) outlined a list of the biggest tax increases, saying:
“President Biden’s $7 trillion tax increase on small businesses and families means fewer jobs, higher prices, and handing our competitive advantage to China. Far from going after the wealthy, these are tax hikes that hit workers, mom-and-pop business owners, seniors nearing retirement, and family farms and ranches. And with the IRS getting another $104 billion and an expanded ability to approve penalties, Democrats will be on the fast track to collect your life savings.”
The Details:
President Biden Quietly Pledges to Let Trump Tax Cuts Expire
- Even as the President claims he will not allow the middle-class tax cuts in the 2017 tax reform to expire, his budget fails to show any plan to stop the increases and spends as though they don’t exist anymore.
- That’s approximately $2 trillion in new taxes on top of the nearly $5 trillion explicitly included in this budget.
Sending Jobs and Companies Overseas with Higher Business Taxes than China
- Increasing the corporate tax rate to one of the highest in the world would put America at a disadvantage in attracting investment and jobs.
- As much as 75 percent of the burden of corporate tax increases falls on American workers and consumers in the form of lower wages and higher prices according to recent economic studies.
Global Tax Surrender Allows Foreign Governments To Take American Tax Dollars
- President Biden’s global tax surrender to the Organization for Economic Cooperation and Development (OECD) sends American tax dollars to foreign governments and entities, while failing to hold China accountable.
- Analysis from the Joint Committee on Taxation (JCT) finds that under Pillar 2, the United States stands to lose over $120 billion in tax revenues to foreign nations. And under the current OECD Pillar 1 proposal, according to JCT analysis of tax year 2021, American companies earned 70 percent of the profits that would have been subject to reallocation and taxation by other foreign nations, and the U.S. would have lost up to $4.4 billion in tax revenue to them.
A Second Death Tax Even Though You Only Die Once
- A family tragedy will become an even greater financial hardship thanks to President Biden’s proposed new death tax that will force generational businesses like family farms and ranches to sell off assets to pay nearly $100 billion in death taxes.
- By removing what’s called the “step up in basis,” a family business will be taxed according to the value it accrued since its beginning, even if it remains in the family – devastating to farms and ranches that are passed down through generations.
Breaking Pledge Not to Raise Taxes on Small Businesses
- President Biden’s proposal to raise the top rate to 39.6 percent goes after small business owners who pay their business taxes via their individual tax return – despite his pledge not to raise taxes on small businesses.
A Tax on Wealth You Haven’t Even Earned Yet
- Democrats want to tax the “unrealized gains” of assets, a long-sought priority of progressives such as Senators Elizabeth Warren and Bernie Sanders.
- Under President Biden’s budget, Americans at the end of their careers – who have reached their highest earning level just before retirement – or those who have built up a business over a lifetime but not sold it, could be hit with a so-called wealth tax that would be an additional 25 percent on those assets. These are not the super-wealthy, but people who have worked a full lifetime and earned their retirement.
- Charging tax before an asset is sold runs counter to how income taxation works under our Constitution; the proposal would require Americans to declare to the IRS the value of their home, business, and personal assets on an annual basis to be levied a new tax bill.
Hurting Americans’ Retirement Funds
- Democrats’ budget calls to raid the retirements of those with successful careers, capping the retirement plan benefits of certain individuals.
Going After the Sweat Equity of Small Business Owners
- Biden calls to expand the Net Investment Income Tax (NIIT) to apply to “non-passive business income” – meaning owner operators of businesses (e.g. mom-and-pop shops and family-owned businesses) will have to pay higher taxes.
Higher Prices for Energy Bills and an Energy Insecure America
- Biden proposed an additional $120 billion worth of higher taxes for American energy production which will make America less energy dependent – forcing the U.S. to rely on foreign nations for our energy needs.
- These taxes – including the corporate tax increase – will result in higher utility and gas costs for American families.
An IRS That Would Terrify Godzilla
- Democrats call for another $104.3 billion to the agency, on top of the massive pay raise given to the IRS by congressional Democrats in 2022, and expand the ranks of those who have authority to approve penalties – regardless of the merits of those penalties.
- President Biden is essentially reneging on the bipartisan agreement he made with Republicans in the Fiscal Responsibility Act to rescind part of the original $80 billion pay raise provided to the agency by congressional Democrats in the so-called Inflation Reduction Act.
