This week, President Biden gave an historic address to Congress. It was the first time that the President had two women sitting behind him as Vice-President and as Speaker of the House. Sadly, the rest of the occasion and speech was far less interesting and far from an historic break with the past.
The Democrats are once again returning America to the path of vastly increased spending and much higher taxes to the tune of a $4 trillion increase in the budget. Of course, the President has promised that ordinary Americans that they will not tax increases. As he put it “it’s time for corporate America and the wealthiest 1 per cent… to pay their fair share” and these tax increases represent part of his policy to go after the ‘millionaires and billionaires who cheat on their taxes’.
Of course – those that cheat, avoid and evade their taxes are definitely going to take kindly to increased taxes. It is a certainty that, once faced with a disapproving Grandpa Joe and jacked up taxes, they will suddenly change their attitude and become model citizens. Moreover, as we know, increasing taxes always increases revenues. It’s not as if a small thing called the Laffer curve has been proven to be the rule when it comes to the relationship between higher taxes and government income.
There remains the fundamental disconnect between the rhetoric of the Left that Biden has happily used in his speech and the reality of the tax system in America. What does he mean by “fair share”? How much money will be enough for the Left to squeeze out of those on the highest incomes? 40 per cent of US income tax is already paid by the top one per cent. When you move a little further out – almost 90 per cent of income tax in the US is paid by the top 25 per cent. When would the Left stop and consider that perhaps the richest already pay their fair share and increased taxes will simply drive the wealthiest away and decrease tax incomes?
We must also think about the knock on affect that these proposed tax rises will have on America’s recovering economy. All of these tax changes will have a purely negative affect on entrepreneurship and investment. There appears to have been a near unanimous reaction from investors – that growth will be stifled – with startups and entrepreneurs blocked from ever going anywhere due to lack of funding, as investors who take on the risk will not deem it worthwhile.
The rises also represent a direct attack on business. This will go well with Biden’s base initially, but reality will bite back as employment and wages do not pick up. The government will remain with higher bills and people will still not have jobs – perpetuating the cycle or “need” for increased taxes to pay for a larger welfare state. The balance of risk versus reward for investment or expansion will be further skewed away from reward, a balance already dangerously compromised by the pandemic.
Biden’s speech and his tax rises are idealistically driven and far from based in sound policy. You only need to look at the rest of the speech to see this. He is somehow promising this massive expansion of government spending while simultaneously claiming also that there will be no deficit increases – despite the US deficit already on a upward trajectory.
If he really wanted to help, Biden should have been investing in policies that actually benefit Americans and rewarding businesses that have been going through a tough time. Everywhere you turn his speech is an ode to regulation and taxation. No matter how much Biden or his supporters try to dress his plans up as “historic”, this is the Democratic party turning to the typical, tired and perpetually failing leftwing big government decision-making of the past, precisely the opposite of what America needs.