Congress is looking at a plan to place higher tax rates “on corporations, investors and high-income business owners,” The Wall Street Journal reported. The $2.2 trillion tax plan is supposed to cover part of the costs of the $3.5 trillion budget resolution and a $1 trillion infrastructure spending bill.
The Journal reported that the money “would go toward expanding Medicare, increasing renewable-energy tax breaks and creating a national paid-leave program, among other items.” The newspaper’s editorial board said that the tax proposals aren’t final, as the House Ways and Means Committee would start debating the bill this week, but it called the plan, a “Washington money grab for the ages.”
The editorial noted that this would affect employees, consumers and shareholders, as such tax increases are simply passed on to them from corporations.
Replacing the corporate tax rate from its current rate of 21% to a graduated rate, topping out at 26.5% for companies earning more than $5 million a year.
Increases the top individual income tax rate from 37% to 39.6%.
Married taxpayers reporting income over $5 million a year would see a surcharge of 3% on their adjusted gross income.
The long-term capital gains tax rate would increase from 20% to 25%.
Companies would see their taxes on foreign income increase from 10.5% to 16.6%.
So how would these tax increases affect families? The National Taxpayers Union (NTU), which views itself as the “Taxpayer’s Lobbyist,” wrote that increasing the corporate tax rate “will disadvantage the U.S. as a place to do business when compared to economic peers around the world.”
The organization said that such an increase would affect lower-income and middle-income households, which “will bear a significant portion of those corporate tax increases (likely in the tens of billions of dollars over the next decade).” NTU added, “Raising taxes on capital gains and the net investment income tax will harm American businesses at the worst possible time and stifle our economic recovery.”
CNBC reported that high earners in New York City would face a combined city, state and federal tax rate of 61.2%, while high income residents of California would face a combined rate of 57.2%. Top earners in Hawaii would face combined rates of 57.4%, and New Jersey’s rate would be 57.2%
Ryan Ellis, president of the Center for a Free Economy, wrote in National Review that the plan harms family farms and businesses, as it includes an increase in the death tax. Ellis said, “Instead of being able to shield up to $24 million of assets from the 40 percent death tax, family businesses (which overwhelmingly bear the death-tax burden) will be able to exclude only as little as $6 million.”
Ellis wrote that the proposal would impose “a 95 percent tax on the top 250 drugs on the market, plus all forms of insulin” which would “immediately double the price of every drug we take, or our parents and grandparents need to survive.”
“The only way out of this 95 percent tax is to submit to a government-imposed price control, which will inevitably lead to shortages of drugs at your local pharmacy and in turn government rationing,” he added.
The tax plan is supposed to help fund the $3.5 trillion budget reconciliation package, which The Journal reported in August “is expected to include paid family and medical leave, subsidized child care, an extension of an expanded child tax credit, universal prekindergarten for three- and four-year-olds and two years of tuition-free community college.”
The paper explained that the proposed budget would “provide green cards to millions of immigrants,” expand Affordable Care Act (aka Obamacare) subsidies, broaden Medicare benefits to include vision, dental and hearing, and seek to address climate change with “tax credits for clean-energy investments.”
In addition to harming families with corporations increasing prices to cover the new taxes, negatively impacting family-owned businesses, and pushing jobs overseas, the proposed spending also increases the national debt, which has gone up dramatically in recent years.
As Focus on the Family President Jim Daly recently wrote, “Then there is the massive debt these spending bills are burdening the next generations with – something that many politicians seem impervious to.”
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