There is ongoing conversation in Washington D.C. that President Joe Biden is planning the first major federal tax hike since 1993.
An article from Bloomberg.com, published the following the alleged tax policy changes.
- Raising the corporate tax rate to 28% from 21%
- Paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnerships
- Raising the income tax rate on individuals earning more than $400,000
- Expanding the reach of the estate tax
- A higher capital-gains tax rate for individuals earning at least $1 million annually. (Biden on the campaign trail proposed applying income-tax rates, which would be higher)
The proposed tax increases are reminiscent of the same increases implemented in 1993 by the Clinton Administration. Democrats are quick to insist that these tax increases led to the economic boom of the 1990’s. However, if the increases were good for the middle class, the financial strategy of the administration should have been popular. Yet, in the elections of 1994, Republicans dominated with historic wins garnering 8 seats in the Senate and 54 seats in the House. This gave Republicans control of both chambers for the first time since 1952.
Democrat policies of high taxation and spending always ignore two facts that are very important for every American to remember…
- Private individuals and businesses use money more efficiently than the government. Additionally, money will do more good for more people in private hands than in those of the government.
- In a free country, money belongs to the people who earn it. Wealth does not appear out of thin air, it has to be created; and those who create it have a right to keep it. Citizens of a free country may agree to give up a portion of the wealth they create in order to pay for certain public goods and services. However, the government does not have unlimited claim on their money to spend it cart blanche.
With Democrats controlling the United States Congress and The White House, it is very likely that we will see a tax increase similar to what was previously explained. It is also likely that the enormous COVID-19 relief packages will serve as an excuse to push these tax increases through Congress.