Despite continuing progress and a fragile economic recovery, Democrats, including former Vice President Joe Biden, have pledged to reverse critical parts of the 2017 GOP Tax Cuts.
These tax hikes would hurt poor- and middle-class workers the most, according to multiple nonpartisan analyses. Tax reform provided a better path to recovery that should be replicated, not repealed, as America reopens.
After President Trump slashed the corporate rate to 21 percent from 35 percent, America became the most competitive economy in the world for the first time in decades.
The lower corporate tax rate triggered a global response toward competitiveness, with six other countries lowering their corporate tax rates.
Lower taxes, coupled with a balanced regulatory approach, led to a spike in paycheck growth and a jobs boom for minority workers, individuals without a high school degree, Americans with disabilities, and women of color.
Many of those gains have been reversed due to the novel coronavirus, with Main Street businesses being forced to shut their doors on a dime’s notice.
Congress acted swiftly to help alleviate some of the economic damage; the popular Paycheck Protection Program saved countless jobs and softened the economic blow, keeping workers and these small companies tied to their paychecks.
Still, companies are facing challenges reopening. Federal unemployment benefits often pay more than what a typical mom-and-pop shop could offer workers, making it hard for businesses to bring back employees as health conditions permit.
Mr. Biden’s solution? Take away more money from these job creators.
The core of Mr. Biden’s tax plan is to raise the corporate rate to 28 percent from 21 percent, which would put America behind global competitors and raise taxes on ordinary workers.
The nonpartisan Tax Foundation estimates that Mr. Biden’s plan would reduce wages by close to 1 percent for average workers. The think tank projects that over 585,000 jobs would be slashed. And they find that GDP would shrink by over 1.5 percent.
Estimates from the Wharton School of Business also estimate that GDP would fall under Mr. Biden’s plan.
And more liberal-leaning estimates, including from the Tax Policy Center, concede that under Mr. Biden’s plan all taxpayers, including those at the bottom end of the income scale, would see an increase in taxes owed, beginning in 2021.
Additionally, Mr. Biden’s plan to reverse the new 20 percent pass-through deduction for small businesses would “diminish the job-creating and sustaining capacity of millions of small businesses that file under the individual income tax system,” according to Patrick Gleason, Vice President of State Affairs at Americans for Tax Reform.
Granted, Mr. Biden’s plan would need to pass through Congress. Republicans state that implementing tax hikes after a global pandemic would be catastrophic for workers.
“Raising taxes on the heels of this economic crisis is like punching a hole in your boat at the end of a storm,” Rep. Kevin Brady (R-TX) said in an interview with The Wall Street Journal.
Mr. Biden’s agenda beyond the tax code—ranging from infrastructure to expanded Social Security benefits—would need significant financing. New York Magazine notes that “there is simply no way for [Democrats] to durably finance the kind of welfare state that Joe Biden claims to support on deficit spending and soaking the uber-rich alone.”
In other words: all taxpayers will end up having to give up more of their paycheck to Uncle Sam in a Biden Administration.
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