President Joe Biden repeatedly promised not to raise taxes on anyone earning under $400,000 per year. Now, Biden, Senate Budget Chairman Bernie Sanders, and House Speaker Nancy Pelosi are attempting to pass the costliest bill in history, and in doing so, they will violate Biden’s promise and hit the wallets of middle-class and even lower-income people.
The Joint Committee on Taxation, a nonpartisan committee of Congress, found that by 2027, the package being advanced by House Democrats under the guise of improving “infrastructure” will raise taxes on people with incomes as low as $30,000 per year. People with incomes between $100,000 and $200,000, well within the range that Biden promised would not pay “a single penny” more in taxes, will see a tax hike of more than $830 in 2027.
Worse yet, tax hikes are far from the only cost that will be imposed on families in the Biden/Sanders/Pelosi scheme. Here’s why:
The bill could cost more than $5 trillion — a sum far too large to be paid for only by class warfare against the highest earners and large corporations. In addition to adding over $1 trillion to the $29 trillion national debt, it would impose more than a dozen tax hikes and cost increases that hit the wallets of people across the income distribution.
First, trillions of dollars more in federal spending could worsen already-rampant inflation. Prices soared more than 8% in August compared to a year ago, the highest rate in more than a decade and far exceeding wage gains over that time — meaning life has gotten much harder to pay for.
Additionally, the House plan includes a nearly $100 billion tax increase on tobacco and vaping products. This tax would disproportionately hit lower-income people and undermine efforts to reduce tobacco use.
The package would also make life more expensive by raising energy costs, which are already up 32% from last year. Lower-income families spend a larger portion of income on energy, yet the partisan legislation contains several policies, such as carbon taxes, that could further raise the cost of filling up gas tanks or heating homes. In 2015, 25 million Americans reported forgoing food and medicine to pay energy bills.
In 2018, people were given respite on their utility costs. Following the enactment of the Tax Cuts and Jobs Act, utility companies passed $90 billion in savings on to consumers. Unfortunately, along with other harmful energy policies, the Democrats’ package will eliminate many of those savings by raising the corporate tax rate.
Higher energy costs are far from the only negative effect of the tax hikes. The left-leaning Tax Policy Center estimates that about three-quarters of middle-income households would see their incomes fall as a result of the corporate tax increase. A Federal Reserve study found that for a family earning $80,000 per year, a corporate tax hike could cost more than $2,000 a year in lower wages. This is because workers bear a significant brunt of the burden of the corporate tax — so even if the numbers appear only on business tax filings (including those of more than a million small businesses despite Biden’s pledge to spare them too), working families would be harmed in the form of lower wages, higher prices, and reduced retirement savings.
In total, the corporate tax hike could hit 169 million taxpayers earning less than $500,000 per year, according to the Joint Committee on Taxation.
The measure would even go after some of America’s neediest families for additional tax revenue. It would empower the IRS to hire 87,000 more enforcement agents and require banks to turn over account information to the tax collection agency. Proponents claim increased enforcement would be aimed at high earners and large companies. But a significant portion of the tax gap comes from low-income families that use benefits such as the earned income tax credit and child tax credit, meaning struggling families will be targeted by IRS agents too.
There are countless other tax increases on the table, ranging from capital gains to plastic. In fact, it seems that the only individuals who stand to benefit from the tax changes are wealthy Californians and New Yorkers who may again be able to deduct state and local taxes from their federal tax bill.
Biden, Sanders, and Pelosi are attempting a fundamental transformation of America into a European-style social welfare state, and to even come close to paying for their plan, everyone, not just the wealthy and large corporations, must bear the cost. That many of these middle-class tax hikes will be imposed indirectly doesn’t make that any less true.
Reasonable people can disagree about the merits of inserting the federal government into nearly every aspect of our lives from cradle to grave. But the fact of the matter is that to pay for it, nearly everyone would take a hit.