The House Ways and Means Committee released an outline of tax proposals to offset President Biden’s jaw-dropping spending plans, and it’s the expected assortment of tax increases on business and the affluent that Democrats like to pretend can fund a social-welfare state of the sort that Bernie Sanders has long pined for and advocated.
The individual tax rate would increase from 37 percent to 39.6 percent, the capital-gains rate from 20 percent to 25 percent, and the corporate-tax rate from 21 percent to 26.5 percent, among sundry other provisions befitting the hideously complex U.S. tax regime.
It’s a sign of the scope of Biden plans that the committee version represents a step back from his tax proposals, yet still clocks in at an enormous $2.2 trillion in estimated new revenue over ten years.
The corporate taxes are particularly noxious. …
… According to the Tax Foundation, a top corporate rate of 28 percent, the level that Biden favors, would once again give the U.S. the highest rate in the OECD, at 32.3 percent once state-level corporate taxes are factored in as well. France currently has the highest rate but is set to reduce it next year.
What’s the sense in instantly making the business environment in the United States less favorable and giving a competitive advantage to foreign countries?
While the Way and Means draft rejects Biden proposals such as taking the capital-gains rate all the way up to 39 percent (!), it does everything it can to try to hold anyone making less than $400,000 harmless. As the Washington Post puts it, “the efforts are designed to avoid even the appearance of affecting middle- and lower-income households.”
This is where the Democrats are willing to talk the talk about a cradle-to-grave welfare state, but not walk the walk. There can be no European-style welfare state, at least not sustainably so, without European-style taxes.