Implied By the Biden Budget Is Record Tax Hikes

President Biden has released another historic budget, proposing record high tax increases to fund massive increases in spending. While he talks about fiscal responsibility, the President is calling for more spending and higher taxes than any other in our history.

Under his budget, the total amount of taxes Americans pay every year would nearly double, Increasing from $4.4 trillion in 2023 to $8.6 trillion in 2034, a 95% increase. At the same time, spending would soar, increasing from $6.1 trillion in 2023 to $10.3 trillion in 2034, an increase of 70%.

The President is proposing $4.9 trillion in tax increases, the largest tax increase ever proposed. Under his budget, taxes as a share of the economy would average 19.7% of GDP, well above the 50-year average of 17.3%. Over the next ten years, taxes would increase to the highest extended levels in our nation’s history, climbing above 20% of GDP four years in a row, a level reached only once before in World War II.

Individual taxes would increase to 10.2% of GDP, 28% higher than the 50-year average of 8.0%, and a level reached only once before since the income tax began in 1913. Corporate taxes would increase to 2.4% of GDP by 2026, a 50% increase over 2023 and the highest level since 1979.

The President says he is only raising taxes on big corporations and the wealthy. But he is actually proposing 75 separate tax increases which would hit millions of individual taxpayers, small businesses, and working families. The Treasury Department’s explanation of the tax increases is 256 pages long, with a revenue table listing all the tax increases 10 pages long.

He is proposing $2.7 trillion in corporate tax increases, raising the corporate tax rate to a combined rate of 32.4%, one of the highest rates in the world and higher than every other OECD country but one. US companies would face a higher rate than China and all of our global competitors, hurting their ability to compete.

He is proposing more than $2 trillion in individual tax increases, most of it on saving and investment. He wants to nearly double the maximum tax rate on capital gains and dividends from 23.8% to 44.6%, an 87% increase, higher than any European country, including all the Nordic countries. In some states, like California and New York, the maximum tax rate on saving and investment would be nearly 60%.

The tax increases go on and on. He proposes a new surtax on small business investment income which would hit millions of small businesses. He would increase taxes on retirement plans, real estate investors, and family farms. A tax increase on private equity would hit pension plans. A series of tax increases on energy producers would drive up energy prices.

Despite all the tax increases, deficits would continue to grow, averaging $1.6 trillion a year and totaling $16 trillion over the next ten years. The tax increases fuel more spending, which would average 24.4% of GDP,  nearly 20% higher than the 50-year average.

All these higher taxes on work, saving, and investment would do great damage to our economy. Just like previous Biden proposals, these tax increases need to be rejected.