Today’s February jobs report shows that American workers’ real wages have declined every month for nearly two years. The number of relatively high-paying transportation and warehousing jobs fell while lower-paying leisure and hospitality jobs rose.
This steady erosion of American living standards is a direct result of Democrats’ trillions of dollars in needless spending over the last two years that diluted the currency’s value and spurred ongoing high inflation.
President Biden’s budget announced this week would only fuel this inflationary fire. It proposes adding another $500 billion in new spending just next year with new distortionary government programs, such as the expansion of the child tax credit, which suppresses work
Taking a page from their “Inflation Reduction Act” messaging, Biden and his media scribes are selling his budget plan as a “deficit reduction.” In reality, Biden’s budget would raise the deficit from $1.4 billion in 2022 to $1.6 trillion in 2023 and $1.8 trillion in 2024. The total deficit would increase by $17 trillion over ten years.
The only way to get out of the fiscal mess Democrats have put us in is through robust small business-led economic growth. Unfortunately, Biden’s budget would destroy economic opportunity with $4.7 trillion in new taxes that hit small businesses and middle-class Americans.
Biden proposes raising the tax rate on families and small businesses from 37% to 39.6%. He calls for increasing the 3.8% Obamacare tax rate to 5%, and broadening this tax to include small business income for the first time.
He also wants the Medicare tax rate to rise to 5% for those earning over $400,000. In today’s era of high inflation, this tax hike would end up ensnaring much of the middle class in the coming years.
The combined top tax rate on small businesses and ordinary Americans making a few hundred thousand dollars would reach 45% and around 55% when including state and local taxes. At this point, the U.S. becomes a primarily socialist economy.
Biden would also double the capital gains rate from 20% to 39.6%, punishing entrepreneurs who have worked a lifetime to grow their small businesses.
And he wants to raise the corporate tax rate from 21% to 28%, hitting over one million small businesses structured as corporations. Even left-wing economists admit that workers and customers pay for such tax hikes as firms are forced to pass along the costs.
These are not tax hikes on the “ultra-wealthy,” as Biden repeatedly claims. They are painful new expenses for regular small businesses and families at the worst possible time. They are a tax on the American Dream.
All these tax hikes would be topped off by an unworkable and unconstitutional 25% wealth tax on rich Americans’ unrealized investment gains. There’s no better way to chase away the capital that funds entrepreneurs and quality of life advancements. Dubai bank accounts are only a few clicks away.
President Biden’s message to the wealthiest Americans is clear: “You have to begin to pay your fair share, said Shalanda Young, the director of the Office of Management and Budget. “We are happy to have that debate.”
That debate is long settled. The top 1% of earners already pay nearly 50% of American income tax. The U.S. has one of the most progressive tax systems in the world.
Instead of punishing these job creators in a vain attempt to heal Democrats’ self-inflicted wounds, the Biden budget should focus on creating the economic vibrancy needed for more ordinary Americans to join their ranks. Sucking capital from Main Street to Washington, DC, would reduce economic growth and economic opportunity nationwide.
America doesn’t have a revenue problem. Tax receipts as a share of GDP are near a record high. We have a spending problem. More than 40%of the nation’s $32 trillion debt was accrued under former Speaker Nancy Pelosi. Budget legislation must reflect this reality.
Fortunately, Biden’s bad budget is dead on arrival in the House of Representatives. But it serves as a stark warning of Democrats’ socialist priorities if they gain full government control.
Alfredo Ortiz is president and CEO of Job Creators Network and the author of The Real Race Revolutionaries: How MInority Entrepreneurship Can Overcome America’s Racial and Economic Divides.