Paying More? Thank Biden

Washington, D.C. – The latest economic news is not encouraging. The inflationary spike sparked by Joe Biden's reckless spending programs may be coming down, but higher prices are still with us. For the president to claim otherwise, as he did Thursday, is sophistry.

Claiming the decline in prices “adds up to a real break for consumers, real breathing room for families, and more proof that my economic plan is working” is like a pyromaniac suggesting people should be grateful he put out the fires he started. The flames may be extinguished, but there's still plenty of damage to deal with and, let's face it, we'd all be better off if he'd never lit the match.

Things were bad when Biden took office, as he continues to remind everyone. Two years ago, he said during his remarks delivered in the Old Executive Office Building adjacent to the White House, “the economy was flat on its back” and “millions of people had lost their jobs.”

Partially true, but this was due to the lockdowns initiated and enforced by Democratic governors like New York's Andrew Cuomo, New Jersey's Phil Murphy and Michigan's Gretchen Whitmer. In states that never locked down or which reopened for business quickly, the recovery was substantial.

Economists and others looking to understand the impact of the government's overall response to the pandemic need to study it state by state, not by looking at the country as a whole. What they'll find is there were two Americas: one was damaged severely by the lockdowns and the spending intended to alleviate the pain; the other where the lockdowns ended quickly, people went back to work, and things returned to normal much sooner.

They'll also find there's a strong overlap between which states are considered red and those that are blue, further proof that the free market approach to economic policy works better and is better for better than the command and control, central planning model.

If things are getting better, it's because of the industry of the American people, not the Biden economic plan. Indeed, it's fair to say things have gotten “less bad” despite the president's best efforts rather than because of them. Still, there's more to come.

As of January 1, 2023, the economy was hit with a raft of new taxes imposed as part of the various economic subsidies bill pushed through Congress that Biden and others of his persuasion like to call rescue plans. One even carried that name. We're going to get walloped by them soon, and it won't feel good.

Most of them were stuffed into the Inflation Reduction Act that Biden signed late in 2022. Mike Palicz, the director of tax policy for Americans for Tax Reform, a non-partisan taxpayer watchdog group, has helpfully broken them down on the group's website. In no particular order, here they are:

• $6.5 Billion Natural Gas Tax

The Palicz analysis calls this a “regressive tax on American oil and gas development” that will drive up household energy costs. The Congressional Budget Office estimated it will increase taxes by $6.5 billion. It leaves out that it also violates Joe Biden's pledge from the 2020 campaign – since restated, frequently – that no American making less than $400,000 per year will see their taxes go up by “one thin dime.”

Administration officials have admitted repeatedly that taxes on energy were included in the pledge. In a letter to Congress, the American Gas Association said the methane tax would be a 17 percent increase on the natural gas bill for an average family.

• $12 Billion Crude Oil Tax

The tax on household spending is the 16.4 cents-per-barrel tax Democrats insisted on imposing on crude oil and imported petroleum products, which also violates the Biden tax pledge. Still, this tax is pegged to inflation, meaning as the price of gasoline goes up, so does the amount of tax accessed. According to Palicz, the Congressional Joint Committee on Taxation estimates the provision will raise $12 billion.

• $1.2 Billion Coal Tax

A tax hike that more than doubles, says Palicz, the current excise taxes on coal production. The rate imposed on coal from subsurface mining increases from $0.50 per ton to $1.10 per ton, while the tax rate on coal from surface mining would increase from $0.25 per ton to $0.55 per ton. This is supposed to raise $1.2 billion in new revenue from the higher electricity bill consumers will be compelled to pay.

• $74 Billion Stock Tax

This tax will hit retirees and those saving for retirement beyond what is taken out of their checks for Social Security the hardest by reducing the value of what Palicz calls “household nest eggs.”

“Stock buybacks help grow retirement accounts. Raising taxes and restricting buybacks would harm the 58 percent of Americans who own stock and more than 60 million workers invested in a 401(k). An additional 14.83 million Americans are invested in 529 education savings accounts,” says Palicz.

Retirement accounts hold the largest share of corporate stocks, accounting for roughly 37 percent of the outstanding $22.8 trillion in U.S. corporate stock, according to the Tax Foundation. This new federal excise tax on the selling of shares back to companies that issued them is bad for the retirement savings of any individual with a 401(k), IRA or pension plan – including union pension plans. It puts U.S. employers at a further competitive disadvantage with China, which does not have such a tax.

• $225 Billion Corporate Income Tax Hike

President Biden also signed off on a 15 percent alternative minimum tax for corporations based on the financial statement income of American businesses reporting $1 billion in profits for the past three years. These American companies employ millions of Americans who will bear the brunt of the tax through higher prices, fewer jobs, and lower wages.

It will also be bad for the economy. A non-partisan Tax Foundation report from December cited by Palicz found a 15 percent book tax would reduce U.S. GDP by 0.1 percent and kill 27,000 jobs.

It's true that most Democrats have never met a tax hike they couldn't be for. What's regrettable in all this is the failure of the Republicans to articulate well the damage these and other tax hikes will cause to the U.S. economy and household income. The problem is still, as Ronald Reagan said so eloquently so long ago, not that the people aren't taxed enough but that the government spends too much.

In just about two years in office, Joe Biden has presided over a spending binge some experts including The Wall Street Journal estimate to have been somewhere in the neighborhood of $5 trillion. That's probably more, in constant dollars, than Franklin Delano Roosevelt and Harry Truman spent signed off on spending to win World War II.

More taxes, as the GOP opposition failed to explain to the American people, don't pay the bills. They just fuel more spending. Congress is off to a good start with the House of Representatives agreeing to abide by rules that require a supermajority to raise marginal income tax rates and to swap PAYGO as a means of doing business for CUTGO – so that spending has to come down during the budgeting process if it goes up in any one place. That's better than waiting until the end and trying for some kind of across-the-board spending clawback or sequester, which happen so infrequently as to be off the table for the foreseeable future.

The best way to get the economy up and running – or off its back, as the president might say – is to combine spending discipline with pro-growth tax cuts to stimulate growth and job creation. The sooner the Republicans get back to that message, the better off everyone will be.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.

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