Democrats gained control of the U.S. Senate after the recent Georgia runoff elections, giving Joe Biden a clear path to roll back the Tax Cuts & Jobs Act of 2017.
“By the way, how many of you did really well with that $1.9 trillion tax cut,” Biden said during the 2020 campaign. “Well, you did. Well, that’s good. I’m glad to see you’re doing well already. But guess what, if you elect me, you’re not going to have your — your taxes are going to be raised, not cut, if you benefited from that.”
For the first time in over a decade, Democrats hold slim majorities in the House and Senate. His campaign promise to raise taxes on corporations appears to be a top priority.
Working Americans enjoyed increased prosperity under President Donald Trump’s signature law. The Act brought billions in offshore money back to the homeland, spurred job opportunities, and put money back in the pockets of working families. Biden also plans to ramp up estate taxes that protected family farms, businesses, and take a big bite into the salaries of what Democrats call “high earners.”
“Major proposals by the Biden campaign would raise $1.6 trillion to $1.9 trillion over a decade from corporations, $1 trillion to $1.2 trillion from high earners through the income tax, and $800 billion to $1 trillion from Social Security payroll taxes on high-wage earners,” according to the non-partisan Committee for a Responsible Federal Budget. “Biden also supports a fee on banks, which we believe will raise $100 billion.”
The Biden tax plan raises $3.35 trillion to $3.67 trillion during the next 10 years, which is estimated at 1.3 percent to 1.4 percent of gross domestic product. The impact of raising taxes across the board is likely to cause small and mid-sized businesses to reduce workforces. Coupled with Biden’s open-borders policy and foreign worker visa increases, low-income families can anticipate wage stagnation and rising inflation. Simply put, low-income and middle-class families can expect to worse off than they were before the pandemic.
By contrast, President Trump’s signature tax law delivered lower, but equal taxation. Single people or married couples filing separately enjoyed a $12,400 standard deduction. That figure was evenly distributed to married couples filing jointly at $24,800 or $18,650 for a head of household filer. Seniors enjoyed slightly higher standard deductions. Those financial benefits are now at extreme risk as Biden huddles with Speaker of the House Nancy Pelosi and soon-to-be Senate Majority Leader Chuck Schumer.
Although direct tax increases will make Americans feel a sting, the corporate rate hikes are likely to cause a domino effect in the economy. Corporations seeking reduced tax liability are expected to offshore all over again. China offers a 12 percent corporate rate and robust distribution infrastructure. Barbados is deftly positioned for offshoring with a 5.5 percent rate, and thriving Qatar levies only 10 percent.
France reduced its rate to about 28 percent to attract corporations and the EU nation appears to be looking at further reductions. These and other business-friendly countries are where U.S. jobs will be outsourced over the next four years while Americans pay higher taxes.