Biden’s Budget Chokes Retirees, Main Street Businesses, and Federal Revenues with Investment Taxes
In addition to hitting lower and middle-income American families and small businesses with higher taxes, President Biden will be retroactively choking America’s investment infrastructure that’s vital to encouraging savings and funding for community projects and Main Street businesses.
President Biden’s forthcoming budget raises the tax rate on investment to 43.4% from 23.8% for certain “households,” according to a new report from the Wall Street Journal. Worse, it backdates the tax hike to April—meaning if you sold a family business in April 2021 or anytime thereafter, you will face the unlucky surprise of a tax bill that nearly doubled.
This retroactive tax hike will be particularly devastating for small business owners who reinvested all of their savings to build their businesses, and who were relying on the sale of that business for their retirement security.
The last thing we need is higher taxes that discourage investment and reduce financing options that small businesses rely on.
- American families and small businesses are still recovering from the pandemic, and the April jobs report shows signs of our recovery slowing.
- While President Biden claims he’s going after “millionaires,” his tax increases attack America’s investment infrastructure that small businesses rely on for investments, while reducing the wages of workers who aren’t wealthy.
Biden’s tax hike on investment actually REDUCES federal revenue.
- The Tax Foundation finds it would shrink federal revenue by $124 billion over 10 years.
- Penn Wharton estimates that raising the top capital-gains tax rate to 43.4% would shrink federal revenue by $33 billion over 10 years.
Experts are panning Biden’s plan to hike taxes on investments.
- The Wall Street Journal editorial board described it as “the dumbest tax increase.”
- The Left-leaning Tax Policy Center writes that the revenue from taxing long-term capital gains is maximized when the top rate is far below Biden’s proposal, and notes that the Congressional Budget Office and the Joint Committee on Taxation agree.
- Larry Lindsey, a former Federal Reserve governor, said it’s “taxation purely as a form of punishment and is even willing to sacrifice revenue to carry it out.”