Is First Major Tax Hike Since 1993 on the Way?

Is First Major Tax Hike Since 1993 on the Way?

(UnitedVoice.com) – It doesn’t usually matter which party is in control of Congress, our government loves to spend money. The money is the same, but the agenda is different. This time, that’s not true. Democrats in Congress and President Joe Biden are blowing the caps off fiscal, economic constraints. Now, the president is proposing a massive tax increase for the first time in 30 years to pay for it all.

Consider this amazing fact. From 1835 to 2019, the federal government created a total debt of $22.8 trillion. Last year, the government spent $6.5 trillion, and the federal reserve kicked in another $2.3 trillion. In addition, in December 2020, a $900 billion COVID bill was signed into law, and the $1.9 trillion COVID-19 relief bill was signed by President Biden on March 11. Unfortunately, the national debt totals don’t include the possible $4 trillion infrastructure deal that’s more about the Green New Deal, union protections, immigration, and other issues that don’t involve building roads and bridges.

Biden’s Plan

As government spending explodes with so many zeroes, it’s difficult to comprehend. As a result of the exploding debt, massive tax hikes could be in the works. Just a few years ago, the GOP passed historic tax cuts for corporations, small businesses, and families. Big businesses went on a hiring spree and gave their employees generous bonuses thanks to the money they recouped from federal taxes.

During the 2020 general election, then-candidate Biden promised to undo Trump’s 2017 tax cuts on “day one.” He’s following through on that promise. The president’s new plan could be wrapped into the infrastructure bill this summer and would include raising the corporate tax rate to 28% from the current 21%. In addition, the president wants to increase the income tax rate on those earning over $400,000, the estate tax, and a host of other business and investment taxes.

It’s expected any increased taxes would take effect in 2021 if passed and signed into law.

Huge Fight Looms

Republicans plan to dig their heels in the sand and make the Democrats pay in 2022 if they follow through on a partisan tax increase. However, the GOP doesn’t present much of a threat to stop the legislation on its own. The real challenge will be getting it past moderate Democrats in both chambers.

Sen. Ben Cardin (D-MD) hinted that the legislation isn’t likely to be bipartisan in the Senate. He got caught on a CSPAN hot mic telling Transportation Secretary Pete Buttigieg that Democrats will likely need to go it alone again, just as they did with the COVID-19 relief package. That could threaten the legislation getting by Sen. Joe Manchin (D-WV), who says the GOP must be involved and that he won’t support pursuing reconciliation this time around. However, Manchin is a Democrat, and he can be persuaded differently at any time.

In 2017, the business community lobbied hard for the tax rate reduction from 35% to 21%. They are also expected to come out swinging to try and put pressure on moderate Democrats in right-leaning districts and face a difficult 2022 election. Republicans only need five seats to take back the House and one to take back the Senate.

If Democrats keep pushing, they might find themselves right back where they were just a few years ago as the minority party.

Don Purdum, Independent Political Analyst

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