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So Part 3 of Biden's fiscal blowout is now online: $1.8 trillion in new spending over 10 years, plus $2.3T in his "infrastructure" proposal, plus $1.9T in stimulus passed by Congress earlier this year. That's $6T in total: 3x #Obamacare's fiscal scale. https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/28/fact-sheet-the-american-families-plan/
The $1.9T stimulus bill was pure deficit spending, without offsetting cuts or taxes. Now, Biden proposes massive tax hikes to pay for the new $4.1T of spending. These hikes will crush job and wage growth, kill investment in startups, and drive businesses to flee the country.
First, let's discuss Biden's proposed doubling of the capital gains rate to 43.4% (>55% in high-tax states like CA or NY). What's crazy about this is that it stops raising revenue above 28%, because investors rearrange their portfolios to avoid the tax. https://www.wsj.com/articles/the-dumbest-tax-increase-11619384611
The center-left economists who run the Penn Wharton Budget Model estimate that the doubling of the capital gains tax rate would actually *decrease* revenue by $33 billion from 2022-2031. https://budgetmodel.wharton.upenn.edu/issues/2021/4/23/revenue-effects-of-president-bidens-capital-gains-tax-increase
Doubling capital gains tax rates would also crush the ability of startups to get funding, as @JTLonsdale explains, because more people would be hesitant to exit existing investments (i.e. paying capital gains taxes) in order to fund new ideas. https://twitter.com/andrewrsorkin/status/1385601554405859330
Funding new startups matters, because 40% of net new jobs come from startups, according to the Bureau of Labor Statistics. https://www.sba.gov/sites/default/files/Job_Creation.pdf
Doubling capital gains taxes will also harm everyone with a 401(k) or other pension invested in stocks, including unionized and public-sector workers, because investors will pull back from equity markets, especially in concert with eventual tightening by the Federal Reserve.
Now, let's turn to the $2 trillion hike in corporate tax rates in Biden's earlier "infrastructure" proposal. (I put "infrastructure" in quotes because only a minority of the spending is on infrastructure.) https://www.wsj.com/articles/anatomy-of-a-biden-tax-hike-11617662273
Prior to the 2017 Tax Cuts and Jobs Act (TCJA), we witnessed a wave of "inversions": U.S. companies selling out to foreigners to avoid paying U.S. corporate tax rates, then the highest in the 1st world at 35%. TCJA reduced the rate to 21%, in part by ending several tax loopholes.
Now, Biden aims to keep the loophole closures in place, but increase the corporate tax rate back up to 28% and create a minimum corporate tax rate on foreign revenues that will basically make U.S. businesses uncompetitive if they try to sell their products or services abroad.
Because U.S.-based companies will be taxed by the U.S. global revenues, along with that foreign revenue being taxed in the country of its origin (double taxation), Biden's corp tax hike will incentivize every co. with meaningful foreign revenue to relocate outside the U.S.
To put all this in context: the TCJA cut taxes by a total of $1.3 trillion over 10 years. Biden's twin tax hikes would increase taxes by about $4 trillion over 10 years. In other words, the Biden tax hikes are roughly 3x the scale of the 2017 tax cuts. Massive.
Biden clearly is hoping that voters believe that corporate tax hikes won't affect them. But that is plainly untrue. If businesses have less money, they have less money to hire workers, raise salaries, and purchase products and services from other businesses that increase growth.
The Biden fiscal blowout is the last legacy of @RealDonaldTrump, because Trump actively depressed GOP turnout in the Georgia special elections, giving Biden the one-vote Senate majority he needed to even consider such radical and destructive policies.
