Only the very naive could believe that the golden rain that fell on America during the reign of Biden was akin to manna from heaven. You don’t have to pay for God’s gifts, you have to pay for Caesar’s. And reckoning is coming inexorably. Even the center-left administration will not dare to continually and gigantic increase in public debt, so Treasury Secretary Janet Yellen spoke of raising taxes.
In the first place – taxes on legal entities, on corporate profits. Over the next 10 years, the Democrats plan to raise it from 21% to 28%. The next step is to raise taxes on the income of the rich, including investment income. Both measures are estimated to generate $ 3 trillion, or $ 300 billion annually, over a decade, or about 1.4% of the United States’ GDP. The country has not experienced such a tax jump since the late 1960s. In 1993, Clinton also raised taxes significantly, but his measure only covered 0.4% of GDP.
Trump’s 2017 tax reform was designed to eliminate distortions in corporate taxation. Previously, American firms operating overseas paid taxes in the country where they were located, and then at home if they transferred their profits here. As a result, American firms have accumulated a lot of funds overseas. Trump cut corporate tax from 35% to 21% – and from 2018 to 2020, about $ 1.6 trillion flowed to America. In the three years preceding the reform, the amount was $ 495 billion.
So, if you follow the territorial principle and tax corporate income only in the place where they earned it, then what will stop American firms from moving abroad if Biden’s people are now raising extortions? Janet Yellen wants to stop them with moving fines, coupled with the so-called “global minimum tax”. Countries, according to the idea of biden, should not compete with each other for jobs and attract companies by offering them tax breaks. American companies that merge with foreign companies or take over them, the head of the Ministry of Finance is convinced, have no right to a competitive advantage over foreigners who merge or take over American businesses. Given that nine economically advanced countries, including France, Sweden and the Netherlands, have recently cut corporate taxes.
The state, says Yellen, has the right to carry out financial planning in a predictable tax environment. Moreover, “everyone, in fairness, is obliged to pay his share of the tax.” A graduate and professor of economics at elite universities, who headed the US Central Bank, famously echoes the follies of the left. Such, apparently, is the price for a ministerial chair today!
Yellen’s commitment to eliminating international tax competition is in tune with Biden’s position on interstate competition for jobs within America. The administration allows the states, the beneficiaries of federal subsidies, to raise taxes without fear and reproach, but if they cut their taxes, and part of the subsidy is used to cover the resulting budget deficit, they will lose this part of the subsidy. 17 governors are suing the administration for attempting to interfere with the sovereign powers of states to determine their own tax policies.
The Organization for Economic Cooperation and Development, which unites the world’s leading economies, also wants to introduce a global minimum taxation, but at a level of 12%, and not the draconian 21%, as Biden wants. Perhaps only the American left is willing to punish domestic entrepreneurs in the hope that the rest of the world will follow their self-destructive example!
The mossy myth that Bayden’s people tirelessly pedalize is that the taxes they propose will only affect the management team of corporations and the richest shareholders. However, any literate freshman knows that corporations, by and large, do not pay taxes, they only accumulate taxes, which indirectly fall on consumers in the form of increased prices for goods, hired workers whose wages do not grow at all or grow more slowly than they could. in the absence of an additional tax, on shareholders who do not get a return on their investments.
Economic research in this area demonstrates a rare consensus: the higher the net profit of corporations, the wider the investments that increase the productivity of workers, which, in turn, makes it possible to increase their wages. In short, the lower the corporate tax, the higher the wages of the “great army of labor”. Byden’s taxes will affect the pension funds of workers and their earnings, and the prices for the goods and services they purchase will rise. If not instantly, then certainly in the medium term.
The transformation of a colossal scale – $ 4 trillion in new government spending, $ 3 trillion in new taxes – is going to be carried out by the Biden members with only a minimal majority in Congress. This is a real insurrection, compared to which the January riots on Capitol Hill seem a mere trifle.
Democratic bounty: the hour of reckoning draws near