President Joe Biden and Senate Democrats are pushing a reckless $3.5 trillion tax and spend plan.
Senate Majority Leader Chuck Schumer and Budget Committee Chairman Bernie Sanders claim their plan would be the largest tax cut in history for the middle class.
This is not true. These plans would raise taxes on working families and small businesses and would expand the welfare state and broader dependency on government. It would increase the corporate income tax to 28% (32% after state taxes), which would give the United States a higher tax rate than Communist China and other foreign competitors. In addition, it would result in a tax increase on businesses four to six times higher than the tax cut they saw under President Donald Trump’s tax plan.
Biden also wants a global minimum tax that could see American businesses pay a rate of 26.25%, a rate significantly higher than the 15% rate that Treasury Secretary Janet Yellen is pushing foreign countries to adopt.
These tax hikes will not be paid by businesses but will be passed along to working families in the form of higher costs, fewer job opportunities, and lower wages. People are already seeing inflation — with the cost of many goods and services, including food, fuel, and housing, increasing faster than they have in years. Raising taxes on businesses now, as they are already seeing inputs increase, will only cause prices to rise further.
According to a National Bureau of Economic Research working paper, 31% of the cost of corporate taxes is borne by consumers through higher prices. Similarly, a 2017 study by the Tax Foundation argued that 70% of the corporate tax falls on labor. A 2006 study by William Randolph of the Congressional Budget Office found that 74% of the tax falls on labor.
Democrats claim no one earning less than $400,000 per year will see a tax hike under their new tax-and-spend plan. Yet, according to the left-of-center Tax Policy Center, three-quarters of the middle class will see a tax increase in 2022 under Biden’s plan, while 95% of taxpayers will see a tax hike by 2031. Similarly, an analysis by the nonpartisan Joint Committee on Taxation found that Biden’s plan to raise the corporate tax will hit workers, retirees, and small businesses, including 98% of Americans earning less than $500,000 per year.
Democrats are misleading the public. Their tax increases will harm working families by raising the cost of goods and reducing jobs and wages for families.
Alexander Hendrie is director of tax policy at Americans for Tax Reform.
