President Joe Biden and Vice President Kamala Harris attend the National Governors Association Business Meeting, Monday, January 31, 2022, in the East Room of the White House. (Official White House Photo by Adam Schultz)
Patience and prudence are virtues that America rewards. But the tax and spend proposal released this week by the Biden White House punishes such virtues in favor of decadence and gluttony. Chris Edwards, Cato Institute’s Director of Tax Policy Studies, digs into Biden’s proposal and finds it wanting. He writes:
Under Biden’s tax proposal, wealthy people would be rewarded for consumption and penalized for reinvesting to grow their businesses. Patience and prudence would be punished. The Biden plan would particularly harm leading edge industries that rely on wealthy investors to take the large risks that drive American innovation.
Not only are the economics of taxing unrealized gains bad, but the IRS could not handle the administration of a new tax structure based on gyrating asset values. The tax agency has trouble trying to value assets a single time at death under the estate tax. The IRS claimed that Michael Jackson’s estate was worth $481 million, but it was wrong, and after a seven‐year battle the tax court found that the estate was really only worth $111 million. The IRS may face many such battles every year under the new Biden tax. And remember, the IRS is already overwhelmed trying to administer the current tax code.
In the unlikely event that Biden’s billionaire tax is enacted, it would soon be repealed. Biden’s plan is somewhat different, but wealth taxes were repealed nearly everywhere they were tried in Europe due to the economic damage they caused and the costs and complexities of administration.
The administration’s description of the tax proposal says, “America’s imbalanced tax code means that many millionaires and billionaires end up paying lower tax rates than middle class workers.” That is a falsehood if tax “rates” means what every expert agency says it means, including the Congressional Budget Office, Joint Committee on Taxation, and Internal Revenue Service. As I’ve reported here and here, data from all official sources show that top earners pay much higher tax rates than people in the middle or at the bottom.
Read more here.
