Tax revenues are rising to record high levels, fueling more government spending and pushing deficits and debt higher. Yet the Biden administration wants to increase taxes and spending even more.
According to a recent article in the Wall Street Journal, tax revenues in the United States and other countries have risen to the highest levels “in decades” to finance a burst of government spending.
The article, “The Era of Big Taxes is Upon Us,” details how the U.S. and other countries are collecting larger shares of taxes as a percent of GDP. In the U.S., “tax receipts at all levels climbed to nearly 28% of GDP last year, up from 25% in 2019 and the highest level since at least 1965,” aside from a brief surge in revenue from the dotcom boom in the late 1990s. This record high level is higher even than China’s, now at 21% of GDP.Total annual Federal taxes increased from $3.4 trillion in 2019 to almost $5 trillion in 2022, a nearly 50% increase in just three years. CBO projects total Federal taxes to increase to nearly $6 trillion by 2027 and to exceed $7 trillion by 2033, more than twice the level in 2019.
Despite this surge in taxes, the Biden administration continues to believe that the American people are not paying enough in taxes and that taxes should be raised by trillions of more dollars. And although the numbers show that the explosion of spending the last few years has increased the deficit and debt, the White House is making the preposterous claim that Republican tax cuts are responsible for the increase in the debt. According to the CBO, rising deficits and debt are the result of record high levels of spending not from lower tax revenues.In his upcoming budget, the President is expected to once again propose trillions of dollars of tax increases to fund more spending programs. He will propose hiking individual taxes, increasing taxes on saving and investment, and raising the corporate tax rate to the highest in the world. These tax increases would damage investment and economic growth, reduce wages and jobs, and put the U.S. at a competitive disadvantage globally.
Congress needs to change course and put the U.S. on a new fiscal path. Congress should reject the Biden tax increases and focus on curbing the growth of federal spending. And Congress should cut federal taxes to encourage economic growth and shut off the spigot for more government spending.
