Biden Admin Set to Hit American Businesses with $2.5 TRILLION Tax Hike

It looks increasingly as if the goal of Biden’s sinister administration is to impoverish Americans and destroy the American economy, while enabling and abetting China’s rise to world hegemony and appeasing the Islamic Republic of Iran. How do any of these measures benefit the American people in any conceivable way? The Democrats should be thrown out of office by the dozens in 2022 and 2024. But we will need free elections for that.

“Biden Seeks a $2.5 Trillion Tax Hike on American Businesses,” by John Carney, Breitbart, April 7, 2021:

The Biden administration released details of its plan to dramatically increase taxes on American businesses on Wednesday, reversing many of the key provisions of the 2017 Trump administration tax overhaul and replacing some tax breaks with direct government spending.

The program would shift the economy toward increased dependence on government spending to generate economic growth. For example, the plan would repeal a tax cut for income earned by U.S. companies exporting goods and services around the world and offer in its place government spending on research and development.

Some corporations have expressed a willingness to accept a higher statutory tax rate, particularly those that pay far below the statutory rate. Amazon, which has frequently been reported to have paid no federal taxes and reportedly had an effective tax rate of just 9.4 percent in 2019, said it embraced the infrastructure plan and the tax hike. One effect of the hike could be to raise the cost of doing business for potential competitors of Amazon who less effectively duck corporate taxes. In addition, because Amazon is such a huge shipper of goods throughout the U.S., the company would benefit from improved infrastructure—especially if those improvements are not funded by usage fees.

The Biden administration claims that hiking the corporate tax rate to 28 percent and expanding a global minimum tax to 21 percent would largely pay for the $2.3 trillion spending plan President Joe Biden proposed last week. That plan is billed as an “infrastructure plan” but most of the spending would go to social welfare and racial equity programs long-favored by Democrats that have little to do with roads, bridges, airports, or other traditional infrastructure items.

Yet even in the administration’s own calculations, the additional revenues from the tax hikes lag far behind the costs of the spending plan. While the so-called infrastructure plan’s $2.3 trillion would be spent over eight years, the tax plan would take 15 years to raise $2.5 trillion in revenue.

As a result, the plan raises the deficit in the near term. The Penn-Wharton Budget Model issued a report Wednesday saying the combined spending and taxes would cause government debt to rise by 2031 and then decrease by 2050. But following the plan, GDP would be lower by 0.8 percent in 2050. Very long-term economic forecasts, however, are notoriously inaccurate.

The roughly $200 billion excess over how much the taxes would raise and how much the administration wants to spend suggests there is space to address critics, such as West Virginia Sen. Joe Manchin, a key Democratic vote, who would prefer a 25 percent rate. Republican lawmakers have opposed the plan because of its tax hikes and what they say is an overly broad definition of infrastructure.

Commerce Secretary Gina Raimondo said Wednesday that businesses and lawmakers should come to the bargaining table, noting that there could be room to negotiate on the rate and timeline.

“There is room for compromise,” Raimondo said at the White House briefing. “What we cannot do, and what I am imploring the business community not to do, is to say, ‘We don’t like 28. We’re walking away. We’re not discussing.’”

Trump’s 2017 tax cuts halved the burden of corporate taxes on American businesses to 1 percent of gross domestic product. Revenues had previously equaled 2 percent of GDP. The Biden administration says its new plan will hike the burden back up to 2 percent, which it says is below the 3 percent average of peer nations in the Organization for Economic Co-operation and Development.

In a briefing with reporters Wednesday, Treasury Secretary Janet Yellen claimed, without evidence, that the 2017 tax cuts failed to deliver on Trump’s promise of an accelerating economy. In fact, the economy grew faster in the first three years of the Trump administration than it had in the prior three years, upending expectations that the long-but-sluggish economic expansion would peter out during those years. After the 2017 overhaul, the expansion became the longest-running in post-war history.

Yellen LAO claimed that the cuts encouraged other countries to keep reducing their own tax rates in a “race-to-the-bottom” that the Biden plan believes can be halted with an enhanced minimum tax and agreements with other nations. Critics say that unless the Biden administration is able to offer foreign countries substantive carrots—perhaps in the form of lower tariffs for their imports—or wield a stick—higher tariffs—any such agreement is unlikely.

The infrastructure investments would increase the level of GDP in 2024 by 1.6 percent, according to estimates by Moody’s Analytics. But such high levels of spending risk igniting unwanted inflation, according to critics.

But the proposal has also drawn criticism from business groups such as the U.S. Chamber of Commerce and the Business Roundtable, which argue that higher taxes would hurt U.S. companies operating worldwide and the wider economy….

Click this link for the original source of this article.
Author: Atlas Shrugs


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