Taxed Enough Yet?
Add them up – federal taxes.
The federal government taxes basically everything we do.
Taxes include:
Income, Payroll, Capital Gain, Consumption, Tariffs, Estate, Gift, Fees and tolls, Capitation.
I can’t think of a anything we do where we don’t pay a tax. Our phone bill, TV service, electricity and other utilities all have a consumption tax tacked on, including tax on every gallon of gas we put in our vehicles. That’s just the feds, not including any of the state taxes.
The federal tax code now fills 6,871pages of taxes and the involved instructions.
Now comes President Biden’s fiscal 2025 Budget, proposed shortly after his 2024 State of the Union speech. It outlines a myriad of increased and new taxes. Before listing them, the budget itself outlines a deficit of nearly $2T, which would of course be added to the deficit. Earlier this year the debt ceiling deal included a suspension of the $31.5T debt ceiling through 2025. Currently the US debt is over $34T and the rate of increase is about $1T every 100 days. It also now exceeds the country’s GDP and is estimated to grow to a greater percentage of GDP (Gross Domestic Product – the market value of all goods and services.)
The 2025 Budget raises a myriad of new and increased taxes. Those taxes and spending are generally proposed as to their effect over the 2025-2034 period. 1o year projections like them are likely meant to make the average voter look the other way rather than try to figure it out. We can be assured next year will be the same sort of 10-year projection with only specific economic organizations willing to dissect.
Before listing the new taxes and increased tax rates, I suggest the biggest tax put on everybody in the last few years is inflation. Inflation of 20-30% since 2021 was primarily caused by our government excess spending and ‘printing’ money. Getting it under control falls to our Federal Reserve Bank by raising interest rates – which are economy shrinkers. Economies do not grow or expand with high interest rates.
Also not included as an increased tax resulting from the sunset of the 2017 tax cuts for all Americans, so without a continuance the rates will go up automatically in 2025 for every taxpayer.
I’m not going to take space to try to explain the more complex taxes and rates. Congress controls the purse so without its action some of the proposed taxes may not even be in the adopted budget. If President Biden’s proposed spending and revenue were adopted in total however, it’s estimated the debt would rise another 24+% of GDP over the 10-year period.
Here’s the highlights of most of the proposed increased taxes:
- Requires people with 100M+ in wealth to pay at Least 25 Percent of income in Taxes
- Raises Tax Rates for Corporations from 21 to 28%.
- Raises the minimum tax rate for corporations from 15 to 21%.
- Raises taxes on multi-national corporations by adopting the ‘global tax’ being implemented by some large countries. The idea is to negate corporations’ incentives to headquarter in lower tax countries.
- Increase the capital gains tax from 20 to 25%
- Taxing all income and dividends at 39.5% for high income earners.
- Lowers the estate and gift tax threshold.
- Limits business deduction of compensation to any employee exceeding $1M/year.
- Increase the excise tax rate on repurchase of corporate stock from 1% to 4%
- Increase the Medicare tax rate for high-income taxpayers from .9% to 2.9%
Also included is an increase in the appropriation to the IRS to ‘crack down’ on misuse of loopholes.
While not specifically proposed in the 2025 budget, the President and certain members of Congress are testing the water for doing what California is doing, taxing ‘wealth’ in addition to income. We regularly hear the words “fair share.” It’s the elites of socialism telling us that all the countries’ money, assets and business belongs to the government, and they will decide how much of the “government’s” money we’re allowed to keep.
As noted earlier, inflation has lowered income for all Americans. Higher taxes will only exacerbate that situation – especially for the middle and lower classes.
Higher taxes make economies shrink – or at least inhibit growth and expansion.
In analyzing the {Biden} budget and taxes, the Penn Wharton Business Center at the U. of Penn. estimates the GDP will decrease by 1.3% with a reduction in hours worked, capital and wages.
Just looking at the income and capital gains being taxed at 39.5%, coupled with taxes in many states, will mean a lot of people will be paying over 50% of what they earn in taxes.
The Tax Foundation calculates “The {Biden} tax increases would substantially increase marginal tax rates on investment, saving, and work, reducing economic output by 1.6 percent in the long run, wages by 1.1 percent, and employment by 666,000 full-time equivalent jobs. The combination of policies would move the tax code further away from simplicity, transparency, and neutrality, while making the US economy less competitive.”
So, there you have it in a nutshell. Higher taxes, lower economic activity and growth, and more redistribution of wealth.
Closing with a quote by Winston Churchill:
“I contend that for a nation to try
to tax itself into prosperity is like a
man standing in a bucket and
trying to lift himself up by the handle.”
***************
Have a great and prosperous week.
Hug somebody.
References:
SPIDER Bytes
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