(UnitedVoice.com) – It’s a general truth in politics that most people are rarely upset with any one thing. It’s because politicians carefully and strategically don’t go after the masses in legislation. They target groups of people who make easy targets. However, on Thursday, April 22, President Biden found a way to rattle the majority of America.
During the 2020 election, then-candidate Biden warned Wall Street he was coming for their pocketbooks. It was no secret. However, despite the conservative stance of former President Donald Trump and policies friendly to investments, Wall Street heavily backed Biden. They didn’t listen. Now, they are in a tizzy about Biden’s newest proposal to double the capital gains tax on millionaire investors and give their money to government programs that would pay for childcare, retrain workers and fund free higher education.
Biden Attacks Wall Street, but Doubling Capital Gains Hurts All Americas
While some American’s applaud Biden’s proposal to soak the rich, they may want to hold on a moment. Biden’s proposal to double the capital gains tax from 20% to 39.6% on those earning more than $1 million a year will impact virtually every American negatively in some way. Let’s start with Wall Street and work our way down to Main Street.
Democrats believe that the economy should shift from owners of capital to workers. However, the flaw in the thinking is that there are no workers without capital. Workers themselves are a form of capital as an asset that helps a company produce more goods and services to meet consumer demands.
A capital gains tax is a tax on the growth of investments. Anything that grows in value is taxed like stocks, bonds, digital currency, and real estate, just to name a few. By increasing capital gains on the wealthy, Democrats are encouraging them to pull back from the economy. As a result, there will be fewer investments in startup companies and small businesses that fuel America’s economy. Consider these statistics from the Small Business Administration:
In 2010, there were 27.9 million small businesses. In total, 99.7% of US employers are small businesses, and 64% of new private-sector jobs come from small businesses.
Biden’s plan would suck trillions of dollars out of the economy and crush entrepreneurship as people reduce investments in startups. In turn, this plan will result in stagnated wages and fewer jobs.
Stock Market Crash Impacts Middle Class and Poor?
By the close of business on Thursday, the stock market fell nearly 355 points as people began pulling out of the market and taking their gains now before the taxes increase. It could get much worse if this proposal goes through. Fewer investment dollars in company stocks means lower stock valuations. That will drive the prices of shares down and destroy any wealth created by the middle class who invest in stocks or 401(k) retirement plans.
Someone didn’t think this through very well before Biden leaped over the ledge. His proposal doesn’t hurt the wealthy. They will find ways to keep their wealth. It ultimately hurts the middle class.
Biden promised not to raise a single cent in taxes on the middle class. The corporate tax lie was already exposed. Now, this is another pass-through tax the middle class will absorb as it hits their investments. Companies will need to raise prices to compensate for lost investment revenues to keep their infrastructure from crumbling. Who pays for this? Consumers do, and it will be costly.
Republicans warned America in 2020, and voters didn’t listen. Elections come with consequences. It’s always the middle class and poor who get soaked, and it’s not the rich’s fault. It’s basic macroeconomic principles many used to learn in high school.
Let’s hope the GOP can stave off this onslaught that just keeps coming until voters can elect reinforcements in 2022 and 2024.
Don Purdum, Independent Political Analyst
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