Tax Foundation president Scott Hodge told “Your World” Tuesday the tax increases President Biden is proposing would lead to a “smaller economy that is less competitive globally” because he’s trying to pay for his infrastructure and spending programs with the “most harmful taxes possible.”
SCOTT HODGE: She [Jen Psaki] says, “Oh, I don’t know how many people that [tax increase] would affect.” Quite a few. We’re talking about our privately owned car dealerships, small hotel chains, restaurant chains, successful manufacturer PPEs that built up a business over a lifetime and then their state gets hit twice under the Biden plan. It gets hit by capital gains. Say if you have $100 million business, that you left and you built it up from zero. So it’s $100 million worth of capital gains. They want to hit you with the 43% off the bat. Then there’s the estate tax rate of 40%. Once you have done the math and taken account of the exemptions, you’re down to an effective tax rate of 61%. So now you’re heirs are left with a small fraction of that successful fortune that you put together over a lifetime.
He [Biden] talks about trying to make sure that he’s protecting people that earn under $400,000 a year. That’s not so easy. You can direct where it’s paid but you can’t protect or insulate the rest of the economy and regular folk from the economic harm of those decisions. We estimate that those provisions alone would raise about $215 billion over the next decade. Overall, the tax increases that he’s proposing would have serious harm to the economy and overwhelming any of the economic benefits that might come from the other transfer payments or any of the infrastructure that he’s talking about. So what you’ve got is a smaller economy, fewer jobs, less investment and yet a whole bunch of government spending that doesn’t make up for the harm that is done by the taxes.
There’s not enough wealth at the top in order to pay for everything they’re [Biden administration] talking about. But he [Biden] is handing out a lot of goodies. We estimate because of the expansion of the child tax credit, some 58 million Americans will pay zero income taxes this year. Many will get an actual refund even if they pay nothing because of the generosity of these credits. So there’s a lot of goodies being handed out here that are kind of blindfolding people to the possible economic harm of the tax increases on both corporations and the rich. What we’re going to have is a smaller economy that is less competitive globally because he’s trying to pay for his infrastructure and spending programs with the most harmful taxes possible. Those are tax increases on corporations and successful individuals. These are really success taxes that he’s trying to fund his programs with.