April 24, 2023
President Biden introduced a $6.89 trillion budget proposal. Much of it was rejected last year by a Democrat-dominated Congress, so in a House of Representatives under Republican control, there is hardly any chance it will pass.
In truth, it simply sets up President Biden’s re-election platform. It shows where he would lead the country, and most probably won’t like it.
This budget would create a new 25% minimum tax on the full income of Americans with more than $100 million in wealth. That means taxing asset increases, even if the gains aren’t realized. House value went from $10 million to $12 million? You’d pay $500,000 in taxes on that gain, even if you still live there.
President Biden also wants to tax capital gains at the same rate as ordinary wage income for those making more than $1 million annually. This would effectively double the current 20% capital gains rate since he wants to raise the top rate on personal income of more than $400,000 to 39.6%.
That’s not all. The proposal extends the current 3.8% surtax on investment income for couples making more than $250,000 per year. It also raises this rate and the top Medicare payroll tax on wages to 5% for those earning more than $400,000.
This 44.6% top marginal rate would hit business, investment, and wage income hard. Adding in state taxes, many high earners would pay a combined top rate of more than 55%. That’s greater than some of the most taxed nations in Europe!
Corporate tax rates would increase to 28%. Plus, a new 1% tax on corporate stock buybacks would eventually quadruple to 4%.
All these increases are projected to raise revenue as a share of gross domestic product (GDP) to 20.1% by 2033, well above the 50-year average of 17.4%. Meanwhile, spending would be 25.2% of GDP, compared to the 50-year average of 21%.
Amazingly, deficits over the next decade would still total $17 trillion. Also, public debt as the share of GDP would rise to 109.8% by 2033, up from 97% last year.
Want a weaker America? There it is.