That Didn’t Take Long! Biden Admin Announces Massive Tax Increases for Everyone
This is now Joe Manchin’s time to shine. It’s his responsibility to explain this one to the rest of us. The White House is issuing their plan to pay for the new infrastructure bill and there is much to discuss. The plan is a necessary aspect of the bill, as it is going to be pushed through the Senate with the usage of budget reconciliation.
The plan is required to remain deficit-neutral, which is a key element. A new set of corporate taxes will raise the monies but there is one catch. Static tax analysis was used and the tax funding is only slated to last for 15 years. This does not jibe with the promises that Biden made about the matter.
The New York Times took a closer look at the plans. “The Biden administration unveiled its plan to overhaul the corporate tax code on Wednesday, offering an array of proposals that would require large companies to pay higher taxes to help fund the White House’s economic agenda.
The plan, if enacted, would raise $2.5 trillion in revenue over 15 years. It would do so by ushering in major changes for American companies, which have long embraced quirks in the tax code that allowed them to lower or eliminate their tax liability, often by shifting profits overseas. The plan also includes efforts to help combat climate change, proposing to replace fossil fuel subsidies with tax incentives that promote clean energy production.
Some corporations have expressed a willingness to pay more in taxes, but the overall scope of the proposal is likely to draw backlash from the business community, which has benefited for years from loopholes in the tax code and a relaxed approach to enforcement.”
Enforcement policies and tax codes benefit numerous businesses but there are other entities that are going to gain an advantage. In order to fix this potential problem, there is a very easy solution. Flat rate tax systems that do not include any deductions and/or write offs would be the best way to go. Larger businesses would not be as thrilled about this because it eliminates a major edge that they currently have over the smaller companies.
Congress does not like this because all of their social engineering opportunities are taken away from them. The Biden administration does not really want to solve the problem, though. Their goal is easy enough to understand. They are only looking to pick a different set of winners.
The new proposal is not going to be raising the money for the bill until after it has already been sent in. The tax funding that is supposed to be created is not going to be enough, either. The aforementioned tax analysis is also rather faulty. For starters, how can anyone make these types of assumptions unless they have a crystal ball that they are not telling us about?
Once incentives are shifted in statute and regulation, things are not going to remain static but that is exactly what the Biden White House is telling people to bank on. Loopholes are going to shift and of course, the Biden administration’s preferred incentives will move to the forefront. Less money is going to be collected and this is a problem that cannot be undersold by any stretch of the imagination.
Let’s be real, though. Neither party really cares about the spending that takes place or the growing deficit. It’s all political theater that is designed to make people think that they care. Manchin is now at a crossroads. He’s basically going to have to stand down on this.
He said before that there was no way he would go along with this if it led to a corporate tax rate that exceeded 25 percent. We don’t think that he is going to be able to hold out for long on this one. He can tell West Virginia that he fought the good fight but in the end? He’s going to play ball because he will not have much of a choice anyway.