This week, President Biden unveiled his $5.8 trillion proposed budget, which he claims will boost economic growth, lower the deficit and reduce inflation, even though it spends more money, increases government and includes record new taxes on corporations and the wealthy.
I know that Democrats like Biden and Pelosi believe that raising taxes and increasing government spending will lower consumer prices. I’d like to believe that fried chicken and ice cream will reduce your waistline, but that doesn’t make it so.
First of all, here’s King’s College economic Prof. Brian Brenberg explaining why Biden’s scheme to tax “unrealized gains” (taxing the increase in value of something before it’s sold and the owner makes anything off of it) is a “killer of wealth creation,” and how Europe tried it and it didn’t work. There are also the minor problems that it would require impossibly complicated tax records to comply with it, and it’s more than likely unconstitutional.
Also, Biden’s tax on corporations would return the US to having one of the highest corporate tax rates in the world, which would encourage the companies that returned to the US under Trump to move back overseas. And if those companies are no longer here creating jobs under Trump’s tax policies, how will Biden take credit for those jobs?
Once again, here’s a lesson in basic economics for the Democrats in DC, and for far, far too many Republicans there, as well:
No matter how high you raise corporate taxes, corporations don’t pay taxes. They COLLECT taxes. That’s because taxes are a cost of doing business, and costs are passed on to consumers. One reason why California has the highest gas prices in America is that every gallon is taxed 51 cents, so 51 cents gets added directly onto the price at the pumps.
However, if raising prices too high would put a company out of business, then its only alternative is to cut other costs, like reducing staff or cutting pay and benefits. If you care about inflation, policies that result in lower pay doesn’t help people’s paychecks go further. Quite the opposite.
Many people hate corporations in the abstract, but they love the ones that pay their salaries and create the products that they buy. When you attack them with higher taxes, you may feel a brief moment of smug satisfaction, but you’d better enjoy it while you can because it’s going to bite you in the rear soon enough. Sort of like how the satisfaction some people took in voting against Trump in November quickly evaporated once Biden took office and made them pay dearly for it.