Now that we are down to a little more than two months before reconciliation expires, it looks like the Senate Democrats are finally getting serious — they are starting to talk openly about raising taxes.
The flavor of the day seems to be increasing taxes on small businesses. There are two tax increases under consideration that would especially hurt small and family-owned businesses.
First, the Democrats want to expand the 3.8% net investment income tax to individuals and families who actively participate and work in their business. Second, the Democrats want to limit the ability of small and family-owned businesses to fully deduct their losses during an economic downturn.
Combined, these tax increases would transfer more than $400 billion over 10 years from small, American-owned businesses to the federal government.
Senate Minority Leader Mitch McConnell was characteristically subtle. “According to one estimate, nearly half of all the employment in the entire state of West Virginia is at [such] firms. … Half of all the jobs in West Virginia. And these are the firms that Democrats want to hammer with gigantic tax hikes.”
The stenographers in the legacy media have dutifully and wrongly reported that expanding the net investment income tax would increase Medicare funding. There’s only one problem with that: The revenue raised by the tax does not fund Medicare, it goes into the general fund.
How about President Biden’s promise not to raise taxes on those making less than $400,000?
Well, the Joint Committee on Taxation, the nonpartisan office in Congress that examines such things, projects that in 2023, the Democratic plan would raise $33 billion from Americans earning less than $400,000 per year, while providing a net tax cut of about $1.5 billion for Americans earning more than $400,000 per year. That doesn’t sound good at all.
Over the course of the 10-year budget window, roughly 30% of the revenue would come from Americans earning under $400,000 per year. The average tax rate for every single income category would increase.
The Joint Committee also projects that more than a quarter of Americans earning between $75,000 and $100,000 will see a tax increase next year, as will more than half of Americans earning between $100,000 and $200,000. By 2029, nearly 20% of Americans earning between $50,000 and $75,000 will get a tax increase, while none will receive tax relief.
With inflation doing more damage to family budgets than any time in the last 40 years, with the average price of gasoline hovering around $5 per gallon, with a recession clearly visible in the distance, how could anyone be in favor of increasing new taxes?
It turns out that multinational corporate interests — who face both a tax on their book value and a minimum tax (negotiated by Team Biden with the rest of the world) — would rather tax American-owned family businesses than shoulder some of that burden or actually oppose Democratic tax increases.
The pain of a tax on small businesses will get passed directly to employees. It will mean fewer jobs and lower wages. For customers, it will mean higher prices. The corporations who populate the Chamber of Commerce and the Business Roundtable don’t care about those workers or consumers.
What’s surprising is that anyone in Congress would fall for this bit of misdirection. Why would anyone — House or Senate — involved in a close race in the middle of the worst economy in the last 40 years vote for a trillion-dollar tax increase? Especially a tax increase that will fall disproportionately on American small businesses?
What would these new taxes buy? That’s the best part. They would go to subsidize health insurance in the Obamacare markets for people making up to four times the federal poverty limit (or about $110,000 a year). That’s right. The entire purpose of the exercise is to ship money to the well-off so they can buy Obamacare insurance plans.
This is not the first set of Democratic proposals designed to raise revenue. Senate Democrats have been talking for months about federal price controls over drugs (which would lead directly to more premature death and increased misery), as well as energy taxes (which would lead to even higher energy prices).
By now, you should sense a theme. Congressional Democrats seem hellbent on inflicting damage on the American economy, with only Democratic Sen. Joe Manchin showing any moderation.
Remember that when the time comes to vote.