No Tax Increase for those Making Over $400,000?
No tax increases for those making over $400,000? I wouldn’t count on it. With proposals from the Biden administration to raise the top individual tax rate to 39.6% (plus the 3.8% Medicare tax) and 28% for corporations, any American with a job has the right to be concerned.
Yes, from a historical perspective these rates aren’t unprecedented,* but accounting for state and income taxes on top of what Jay Starkman writing for The Wall Street Jurnal calls “…crushing tax proposals…” by the Democrats, tax rates could be significantly higher. The worst of those proposals includes a 12.4% social security tax on earned income over $400,000 while doubling rates on long-term capital gains to 39.6%. Add to that the 3.8% net investment income tax extended by Obamacare, the top tax rate on earned income would be 54.9% while that on investment and savings would be as high as 43.4%.
Just to put this all into perspective, we now live in a very different America than the one that existed in 1909, when the top corporate income tax equaled exactly 1%. The question is: are the middle-class Americans living in today's America even able to financially continue with these proposals? According to Starkman, “Few small businesses or farms could survive these proposed taxes. Assets would need to be sold to raise the cash to pay the tax. Jobs would be lost to liquidations. Many retirement plans and family assets would have to be zeroed out. " 1
No conservative Republican voter ever said living in Joe Biden’s America would include low or even fair tax rates. And that’s why they were exactly that, a Republican voter. But now, with the opposite side being expected to practice what they preach, many Democrats (properly informed ones at least) might just think twice about voting Democrat again in 2024. To put it in Albert Mohler’s simple yet weighty words, “Elections have consequences.”
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* Tax rates during World War II were at 53.4%
Starkman, Jay. "Biden Pushes for Wartime Tax Rates." The Wall Street Jurnal, June 23, 2021.
Taxation without representation. 1776 America revolted over a lot less than this. A nation that disincentivizes production by taxing the fruits of labor while encouraging consumption by incentivizing spending is doomed. The masses discovered long ago that they can vote themselves ‘stuff’ from the public coffers by the practice of electing corrupt politicians. And the corrupt politicians discovered that they can enrich themselves by voting for these handouts. It’s sad-and no matter who we send to DC, they all seem to come down with the same sickness.