Tomorrow is April 15–traditionally known to hardworking Americans everywhere as the dreaded Tax Day. It’s the time when all Americans come together, ritually aghast to see the amount of our income that is siphoned off by the IRS. Although the Biden administration has extended this year’s tax due date to May 17, millions of Americans are right now finishing off their 2020 returns and are once again struggling to fathom where all of their hard-earned dollars are going. Nothing concentrates the mind like a tax bill that is due, and so this week is a fitting occasion to reflect on how much damage the new Biden Tax plan would do to your family–and to working families across the nation.
If Joe Biden has his way, one year from now Uncle Sam will be taking an even larger share–and using it to pay for Biden and the Democrat left’s ridiculous and radical fantasies.
On the campaign trail, Joe Biden promised to undo many of the Trump tax cuts – in other words, raise taxes – often using the tagline of making large corporations “pay their fair share.” Now, as the White House continues to roll out its $2 trillion infrastructure plan that includes provisions for things like “care infrastructure,” “climate change infrastructure,” and a new building for the Department of Commerce, the Biden administration is proposing massive tax hikes to pay for it, raising concerns from Republican lawmakers, business leaders, and middle-class Americans that Biden’s tax and spend liberalism will crush the economic recovery.
Biden’s tax plan would raise the corporate tax rate from 21% to 28%. After many companies returned production to the United States under President Trump, the proposed tax increase would result in the United States having the highest corporate taxes among the world’s most developed economies. This would punish American Workers and effectively provide big businesses with a massive incentive to ship our jobs to China and other countries. The Biden tax plan is tantamount to a tax break for outsourcers. Additionally, a report from the Tax Foundation found that the plan would reduce GDP by 1.62% in the long term and cause a 1.9% decline in after-tax income for all taxpayers. Moreover, the Biden plan would result in a net loss of more than 540,000 American jobs.
The New York Times reported that–in words that should bring chills to every American–the Biden administration is seeking to “beef up” the IRS in the service of this agenda.
One aspect of the Biden plan that has garnered relatively little media attention, but that would nonetheless directly impact the lives of many older and middle-class Americans, are two massive expansions of the estate tax, also known as the death tax.
First, the Biden plan would drop the death tax exemption by 50%, restoring it to pre-Trump levels. In effect, the Biden policy would require more individuals and households to pay taxes after a loved one dies. The most notable effect would be to crush family farms and small businesses, which are often subject to this immoral and unfair confiscation.
Second, Biden has proposed eliminating the so-called “step-up basis” for inherited wealth. Currently, the step-up basis readjusts the cost basis or tax basis for inheritance assets for tax purposes. For example, if John Doe buys a house for $100,000 in 1990, leaves that house to his daughter, Jane Doe, in 2010 when the house has increased in value to $500,000, Jane can sell the house immediately and pay little to no taxes; the house has “stepped up” in its original value when passing from John to Jane upon John’s death, and therefore Jane sees no capital gain on her ownership of the house. However, if the Biden administration has it their way, Jane would owe tax on the $400,000 of increased value from when John first purchased the house, forcing Jane to pay tax on John’s capital gains. Critics of this proposed change have argued that it is effectively a giant middle-class tax hike, as the change would apply to all Americans, not just the wealthy.
Despite the dramatic nature of this shift in policy, you won’t see any Biden administration officials mentioning these aspects of the Biden tax plan on CNN or MSNBC. A recent summary of Biden’s tax plan released by the Treasury Department fails to mention changes to estate tax rules even once. Instead, the White House seems to be betting on public support for raising taxes on businesses.
Top Republicans, including Marc Short, former Chief of Staff to Vice President Mike Pence, have launched an effort to fight back against Biden’s proposed tax hike called the Coalition to Protect American Workers. The group’s website, which highlights many of the job-killing aspects of the plan, reads “This is not the time for unnecessary tax increases that will destroy jobs. Congress should be saying yes to good jobs, not creating new taxes.”
While the Treasury Department can unilaterally execute some of Biden’s proposed changes, any radical change to the tax code would have to pass an evenly divided Senate, where West Virginia Democrat Joe Manchin would likely decide the fate of Biden’s plan. Manchin has indicated that he would oppose raising the corporate tax rate to 28%, but later suggested that he may indeed consider a humongous tax hike right as Americans are trying to recover from the pandemic.
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