No tax increase?
President Joe Biden promised he would not raise taxes on anyone earning less than $400,000 a year. Did you believe him? I didn’t. All taxes are not federal taxes. There are state and local taxes, all of which are affected by the president’s actions. Maybe federal income taxes will not be raised, but the actions and inactions of the president affects local taxes as well as federal taxes.
Next year, the Child Tax Credit payments would end, effectively increasing taxes for families. In the absence of the monthly cash payments guaranteed by the expanded tax credit, about 3.7 million more American children will be living in poverty. By removing the tax credit, families that need it the most will pay more in taxes.
One of the largest proposed tax hikes is the corporate minimum tax on income. Do you really think that corporations will absorb this increase? Companies will certainly raise prices as they maintain the same level of dividends paid to stockholders. This price increase is a sort of a hidden tax increase. Consumers will pay the corporate taxes.
The Tax Policy Center said this minimum corporate tax will hit families indirectly by limiting companies’ dividends to shareholders, which include workers and those investing for retirement.
Normally, property appreciates over time. President Biden wants to tax the property upon the death of the owner. He wants to treat the transfer of the property to beneficiaries as a sale. The deceased individual from whom the assets had been transferred is considered to be a seller and with gains treated as income on their federal estate, gift, or separate capital gains tax returns.
When President Biden took office, he shut down the Keystone Pipeline and stopped all oil development on federal property. Petroleum products are fuels made from crude oil. Not only did gas prices go up but all petroleum products as well. What a lot of people are not aware of is that 6,000 items that we use daily are made using petroleum, such as ink, vitamin capsules, roofing, shampoo, golf balls, tires, nail polish, etc. Almost everything that we buy is made from or with petroleum.
Therefore, these products go up in cost. How does that affect middle class taxes? Well, we all pay a sales tax. In Georgia that is 7%. The annual inflation rate for the United States is 8.5% for the 12 months ended March 2022. This means that an item that sold for $100.00 now costs $109.00. You are now paying $.63 more in taxes than you did a year ago. Add up what you buy every month and you will see how much more you now pay in the taxes that Biden said would not go up.
2022 is seeing the highest inflation rates to hit the economy in over 40 years, and the consumer price index is steadily climbing without any projected improvement anytime soon. Prices are increasing from food items, to household goods, and transportation. The present inflation is driven by supply chain disruptions and bottled-up consumer demand for goods as the Covid-19 pandemic fades. Both of these causes are the fault of the federal government.
The government did nothing to address the supply chain disruption. Intensifying Biden’s inflation is his failure to handle the supply chain and transportation issues that have turned offshore waters most notably at the twin ports of Long Beach and Los Angeles into parking lots for cargo vessels. As a result, supplies are held up while demand increases, a recipe for even greater inflation in the prices of goods Americans need.
Our ports should have worked overtime to handle the large influx of ships carrying needed goods. The ports should have also updated the way freight was handled as many other countries did, except that the unions in the U.S. prevented the ports working 24/7 and the ports installing automated equipment.
The government responded to the pandemic by enacting a number of policies to provide fiscal stimulus to the economy. This extra money pushed the demand for more products, which were short because of the supply chain problems. Shortage of products — heavy demand — inflation — higher sales taxes for the middle class.
Tax revenues are used by the government to finance its expenses and obligations. Expenses are what it takes to the fund the day-to-day operating activities of the government. Obligations include interest on debt, promises made to citizens through programs like Social Security, Medicare, and the Affordable Care Act.
The Heritage Foundation argues that given at current tax rates and expenditure levels, tax revenues will be fully consumed by 2030. We are currently in a period of historically low tax rates. In order for the government to meet its obligations in the future, it will be forced to raise tax rates.
President Biden’s $5.8 trillion budget request reflects an administration grappling with multiple obstacles, such as the pandemic, a huge social spending package and the support of Ukraine because of Russia’s invasion. In the budget proposal, Biden would like to see $550 billion in climate measures, which are questionable as to their effectiveness. Another $550 billion has been approved for roads, bridges, railways and more. Biden also wants funding to help low-income students attend college, which will raise the already current funding of $895 million.
Expenditures must come down or taxes will certainly go up. Biden claimed that “I give you my word as a Biden: If you make under $400,000 a year, I’ll never raise your taxes one cent.” Believe that and I have a bridge in Brooklyn to sell you.