What’s in Biden’s new budget? Higher taxes and more spending
President Joe Biden presented his budget for the fiscal year 2023, and much like earlier proposals with his Build Back Better plan, the proposal does not deviate from Biden’s core belief that what this country needs is higher taxes and more spending.
According to the Heritage Foundation,
….Biden’s budget calls for $72.7 trillion in spending over the next decade—averaging more than $1.4 trillion in higher annual spending than even this year’s extravagant budget.
This will increase the national debt.
Debt would skyrocket from $30.2 trillion today to more than $44.8 trillion over the next decade. Annual budget deficits would start at $1.2 trillion in fiscal year 2023 and rise to $1.8 trillion by 2032.
That’s like an average family that is already $234,000 in debt spending between $9,300 and $14,000 more than it makes each year, with its total debt reaching $347,000 in just 10 years.
And where is this spending going?
Some of the proposed spending programs include efforts to tackle climate change, efforts to advance “equity across the economy and the nation” — whatever that means — strengthening supply chains, improving education, improving access to early childcare education, and numerous other programs. From healthcare to education, to climate change, to equity, Biden’s budget proposal spares no expense.
The plan in total calls for $2.5 trillion in tax hikes. For one, Biden is specifically calling for a 20 percent minimum tax on households with a net worth of $100 million or more. The tax would also include unrealized gains and would raise $361 billion.
But there is more.
Raising the top income-tax rate to 39.6% from 37% would raise $187 billion. Raising capital-gains taxes, including taxing gains like ordinary income for taxpayers earning more than $1 million would snatch $174 billion. Raising the top corporate tax rate to 28% from 21%—a tax on workers and shareholders—would raise $1.3 trillion. Fossil fuels are hit up for $45 billion. We could go on—through five pages of line items in the budget tables.
Tax hikes are problematic, but a wealth tax is especially problematic considering that wealth is volatile and thereby hard to calculate. This would make a tax on net worth not only costly to enforce, but also very complex.
What happens if unrealized gains fail to materialize? The only fair assumption is that someone who has paid a tax on an asset that has dropped in value would get a tax refund. But then again the stock market is falling and rising all the time. The IRS has enough trouble handling taxes as is.
Taxing income avoids all these complexities and also ensures that investments are not discouraged. Taxing unrealized gains is not only costly and complex, but incentivizes more consumption instead of investment.
But even without a wealth tax, $2.5 trillion in new taxes is one sure way to tank an economy.
In a nutshell
Biden is sticking to most of his campaign promises. He wants to take more of your money and give it back to you through a myriad of government programs.
Certainly, the type of budget that the legislature agrees on will likely look different from Biden’s wishlist. But what this budget says is that if Biden got his wishes, it would be higher taxes and more spending all the way through the next decade.