Say It, Joe, or Say It Ain’t So: Biden Camp Backs Tax Hike

Say It, Joe, or Say It Ain’t So: Biden Camp Backs Tax Hike

When my older brother speaks, it’s a good time to open your ears.

If Paul says the golden words, “OK, look – here’s how it was,” get ready. Sometimes, he’s practical; others, poetical. There’s a test to apply, he’ll say, to tell a good diner or candidate for spouse, for crying out loud. If the first words you hear in greeting are – “You want coffee?” – something tasty is coming your way. I see no reason to argue.

On our time, Paul shares old words about taxes and politicians – we’ll get to them soon. His experience is long, but I’ll keep it short.

It’s a good time to talk taxes, because there’s bills to pay and an election on tap. The debate is superheated this time: a pandemic in tandem with usual stresses, domestic and foreign, all calling for cash. One candidate thinks taxes should rise, at least for some citizens, while others need cutting even in these parlous times. We’ll get to Mr. Joseph Biden shortly; now, back to Paul and a very different decade.

In the 1968 election, Senator Robert Kennedy – forever Bobby in the minds of sufficiently aged New Englanders – addressed a rally of top Democratic Party contributors. He had a message to share: Paul, a counterculture figure of some note (in our family, at least), finagled a seat. Bobby delivered it straight: if I’m elected, get ready. I’ll raise your taxes, and no nip and tuck – it’s going to hurt. Ouch, a misstep, you’d think, but here’s the haymaker: when I do it, said the senator, you’ll take it and like it.

I can’t find the quote – candidates make hundreds of speeches – but that’s how Paul reports it. The wild part came next: among the affluent crowd, out came the checkbooks that support all campaigns. America needed work – poverty, inequality, crumbling infrastructure, underfunded social welfare – and Bobby made it sound like he could fix it, if he just had the support. Great progress indeed was made in the coming decades; tragically, alas, without Senator Robert Kennedy.

Those weighty problems, assuaged but eternal, are still around, but the country has shifted. Would Bobby’s boldness pay off today? Time may tell, because Candidate Joe Biden plans to boost taxes on the wealthy, including, of course, that sky-darkening flock of millionaires and billionaires who lavishly back his party.

Here’s Joe Biden’s plan as it currently stands; pre-election planks are notoriously rickety, but we must start somewhere. Candidate Joe assures that ordinary citizens aren’t in the taxman’s crosshairs; indeed, he promises middle-class relief. Job protection measures are also promised to tax-punish corporations that move overseas. The jaded embers in me flare at this, recalling his party’s complicity in overseas job loss. Still, maybe they’ve learned their lesson – perhaps we shall see.

In a ‘read my lips’ moment on his website, the third-person candidate declares: “Joe Biden will not raise taxes on anyone making less than $400,000. Period.” Let’s examine what comes after that declarative full stop.

Hopeful president Biden would raise corporate taxes to 28%, versus 21% now and 35% pre-Tax Cuts and Jobs Act. A 15% minimum tax would be imposed on companies with more than $100 million of book profit in order to prevent any accounting skulduggery from zeroing out a firm’s taxes. Companies would pay the greater of the two: their normally calculated tax bill or the minimum. There’s no slipping out this time, says Joe.

Biden would double the tax rate on the Global Intangible Low Tax Income (GILTI – there’s an acronym to warm left-leaning hearts) earned by US foreign subsidiaries, to 21%. His aim is to strike at companies “that ship jobs overseas in order to sell products back to America.” We have entered the droll-free zone, my readers, so I’ll limit myself to this: you can steal from the opponent’s playbook, just so long as you score some points. Good old politics.

That’s the big news, but a host of small stuff rides in tandem. Biden wants to establish a Manufacturing Communities Tax Credit to reduce taxes on businesses, if you please, that suffer substantial workforce layoffs. Also, the temporary New Markets Tax Credit would become permanent. Certain renewable energy credits would be strengthened and fossil fuel subsidies would be ditched, among other minor shifts and adjustments.

For individuals, Biden would restore the top income tax bracket to 39.6%. It’s now 37%, suggesting little cause for drama. A 12.4% Social Security payroll tax would be assessed on high-income earners ($400,000+), split as usual between worker and employer. There’s an odd loophole here: anyone earning between $137,700 and $400,000 would be exempt from the Social Security payroll levy. It’s a curious oversight I find hard to explain; did overstressed staffers miss this one? Are the mid-level affluent so powerful a lobby? I’d ask Siri to help me sort this one out, but she’d think I was being facetious again.

Next up, we find this curious proposal: “Asking those making more than $1 million to pay the same rate on investment income that they do on their wages.” I doubt any taxpayers will be ‘asked’ anything. Investigation indicates his true intentions: investment income would be taxed at 39.6%, just like ordinary income, for people earning north of $1 million. The step-up in basis for capital gains would also be nixed, but that provision has been living in the guillotine’s shadow for some time. One day, the blade will fall.

The Tax Foundation estimates that Biden’s plan would raise $3.8 trillion over ten years. Factoring in the estimated impact of Democratic Party platforms – a 1.51% shrinkage in economic growth – adjusts the take to $3.2 trillion. Not too shabby, but it may be hard to reconcile reduced economic growth with promises of more jobs and higher middle-class incomes.

Mr. Biden’s tax plan strikes me as an amalgam of good sense, reasonable if hard-to-swallow proposals, sound ideas nicked from the opposing camp, and a dusting of dangerous populist hokum. His party seems motivated by enlightened though potentially deceptive ideas of equity and fairness. Time will shortly tell if they get to try it all out, and how it will affect the captive target audience.

Let Paul have the second-to-last word: the revolution, he says, didn’t happen in the 1960s. The supposedly gray ‘50s – that was the earthquake: when blue-collar guys moved up in the world, left the old ethnic neighborhoods for the suburbs, and created the true nuclear family, and unmatched prosperity. The real story doesn’t always get into the popular narrative, just like candidates don’t always mean what they say. Sometimes, that’s not a bad thing.

As for me, I wish the country good luck. I hope only for a fair fight, and the best outcome any old skeptic can dream.

Round up the Usual Suspects: Sen. Wyden Wants to Fix the Capital Gains Tax Sacramento, We Have a Problem: Democrat’s Wealth Bill Aims to Tackle Tax Flight