Many of the same small business owners the White House met with on Friday would face higher taxes under President Biden’s tax plan, which he has repeatedly claimed only goes after the rich. 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.
According to the Wall Street Journal, a 64-year-old landlord making only $75,000 a year invested in several properties to strengthen his retirement savings, but by selling the property, his savings will be cut down to a fraction because of the Biden tax scheme.
Key excerpts from the story:
- “Without any retirement plan … Mr. Settle used a mortgage to buy the apartments in Versailles for $1.3 million in 1994, seven years after they were built [and] spent about $500,000 on capital improvements. He was able to deduct the cost of much of those expenditures, as well as the buildings’ depreciation—an annual allowance for the wear and tear on an income-generating asset—reducing taxable income from the units.”
- “This spring, he saw a television segment on the proposed increase in capital-gains rates … Mr. Settle, who voted for Mr. Biden, was stunned to learn the extent of the hit.”
- “Under current rates, Mr. Settle’s tax adviser estimates that he would pay just under $500,000 in federal taxes on such a sale, [leaving him with] $800,000 after paying the mortgage, state and local taxes.”
- “Under the Biden plan, Mr. Settle would owe around $390,000 more in taxes, leaving him with about $400,000, his tax adviser estimates.”
- “Four other tax professionals The Wall Street Journal contacted estimated he would owe between about $225,000 and $345,000 in additional taxes.”
President Biden’s tax hikes hurt middle class families and small businesses:
- A Tax Foundation study of Internal Revenue Service data from 1999 to 2007 notes that roughly one-quarter of all millionaires fell into the category for only a single year due to capital gains—likely because these Americans sold a family business or property to fund their retirements. But because this study focuses on an era before tax reform made it easier for more Americans to invest and grow their savings for retirement, the number may be much higher.
- Biden has proposed to make this tax increase retroactive—so if small business owners sold a family business in April 2021 or anytime thereafter, they will face the unlucky surprise of a tax bill that nearly doubled.
- This tax would be on top of tax increases these small business owners would face as a result of Democrats’ proposed elimination of the small business tax deduction, and eliminating the Tax Cuts and Jobs Act which cut taxes across the board.
Experts are referring to President Biden’s capital gains tax increase as “the dumbest tax increase” because it results in less revenue for the federal government:
- 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.
- The left-leaning Tax Policy Center writes that Biden’s proposal raises taxes far past the amount necessary to maximize revenue. Past analyses by the Congressional Budget Office and the Joint Committee on Taxation agree.
- Larry Lindsey, a former Federal Reserve governor, said the Biden investment tax hike is “taxation purely as a form of punishment and is even willing to sacrifice revenue to carry it out.”