BBB’s Killer Taxes
Build Back Better’s taxes, direct and indirect, would mean a world of hurt for American families.
Yes, President Biden’s plan socks the rich, with hikes of more than half a million bucks, on average, for the top 0.1 percent. But it also hits as many as 30 percent of the rest of us, too, according to the Tax Policy Center. Those bump-ups might be fairly small next year, but after that, the expanded child tax credit (up to $3,600 per child) expires, meaning many low- and middleclass families would see their bottom-line tax bill go up even more.
The bill will also slam the majority of the nation’s 30 million small businesses by applying the 3.8 percent net investment income tax to active business income for pass-through firms. Those moms and pops will certainly feel the pinch — but so will their customers, when they pass along the upcharge in the form of higher prices. Republicans on the House Ways and Means Committee say Build Back Better will squeeze more than $400 billion in new taxes from small businesses.
Customers, owners and investors will also share the pain from a new 15 percent minimum tax on corporate profits. Plus, Democrats hope to impose a second 15 percent minimum levy on corporate foreign income. Oh, plus a 1 percent tax on the value of stock repurchases.
High corporate taxes won’t just punish the shareholder: They’ll also make US companies less competitive, meaning business losses — and jobs — just as the nation struggles back from the pandemic and lockdowns.
Yet for all the pain of higher taxes, BBB still won’t even bring in enough revenue to pay for all the (wasteful) spending it calls for: Last week the nonpartisan Congressional Budget Office determined that new outlays will outstrip new revenue by a whopping $387 billion over its 10-year time frame, aside from the new federal take from a supercharged IRS. Meaning that despite Biden’s claim that the bill costs “zero,” it wouldn’t even pay for itself via the nearly $2 trillion it plans in higher taxes.
Worse yet: Many of the bill’s new entitlements would end after just a few years, so even more taxes would be needed to renew them without adding to the deficit — and everyone expects that’s just what’ll happen.
In any case, the first-year impact will goose the federal deficit to $1.3 trillion for the year, with the new cash fueling more inflation that will sock non-rich Americans plenty hard all by itself.
Here’s hoping the Senate kills this turkey by Thanksgiving.