John Smyth
2024-09-22 12:36:07 UTC
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Permalink<https://www.libertynation.com/kamalas-5-trillion-tax-hikes-mean-5-trillion-more-to-spend/>
'Vice President Kamala Harris has proposed approximately $5 trillion in
tax hikes over the next ten years, targeting wealthy Americans and rich
corporations. For a federal government forecast to register $2 trillion
in budget deficits during the same span, could this be the revenue boost
needed to fix Americas deteriorating fiscal health? The projections
show her policies are not even close to plugging the federal budgets
gaping hole.
Kamalas Tax Hikes A Primer
The public has heard the same song-and-dance routine for the last 20
years: Washington must make the affluent pay their fair share by
imposing sizable tax hikes. Interestingly enough, the income tax shares
before and after the Trump-era tax cuts are quite a sight for
progressives. In 2021, the top 1% paid 45.8% of the nations income
taxes, up from 37.3% in 2016. Conversely, the bottom 50% paid just 2.3%
of the countrys income taxes after Trumps landmark legislation, down
from 3% before Trump.
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Still, the Democratic nominee says more needs to be done. The meat and
potatoes of her New Way Forward agenda consist of raising the corporate
income tax rate from 21% to 28%, increasing the corporate alternative
minimum tax (CAMT) rate from 15% to 21%, quadrupling the stock buyback
tax to 4%, boosting the top individual income tax rate to 39.6%, and
taxing long-term capital gains at 28% for incomes above $1 million. At
the same time, she is borrowing a few ideas from her opponents, such as
exempting tips from federal income taxes and expanding the child tax
credit.
Like former President Donald Trumps policy proposals, many of the vice
presidents ideas must pass Congress. A Republican-led lower and upper
chamber decreases the odds that Harris initiatives will be approved and
make it to her desk to be signed. But lets say Kamalanomics looks like
Monica Bellucci, and lawmakers on both sides fall in love with the
economic doctrine. How much revenue would these tax hikes generate?
Crunching the Dollars and Cents
Estimates vary by group. The Committee for a Responsible Federal Budget,
for example, says the revenue effect from the Harris plan would bring in
about $900 billion from fiscal years 2026 to 2035. The rosiest
projections come from the Tax Foundation. The organization projects that
Harris revenue generators would raise as much as $4.143 trillion over
ten years, with much of the burden on corporations.
Here is a breakdown of the central Harris tax hikes, courtesy of the
research think tank:
28% Corporate Tax Hike: $882.8 billion
21% CAMT: $346.4 billion
4% Stock Buyback Tax: $79 billion
25% Unrealized Capital Gains Tax: $516.9 billion
6% Top Individual Income Tax Rate: $170.5 billion
28% Unrealized Capital Gains Tax at Death: $171.8 billion
When her other policy blueprints are inserted into the equation, such as
instituting housing tax credits, reinstating the American Rescue Plans
child tax credit, and exempting tips from federal income tax, net
revenues would be about $1.7 trillion.
Of course, like many other fiscal prognostications, the Trump and Harris
outlooks are based on expectations that the United States will not slip
into a recession, enter a major military conflict, or suffer another
health pandemic. If so, goodbye revenues and hello new spending.
Lets say Harris does fill government coffers with more than $4
trillion, the middle-class tax cuts lead to hefty gains (hi, Laffer
Curve!), and the economic landscape and financial markets stay the same.
Everything is going well for the worlds largest economy. Based on
projections by the nonpartisan Congressional Budget Watchdog (CBO),
these numbers would cover only some of the federal governments interest
payments.
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In June, the budget watchdog updated its ten-year budget and economic
outlook. The cumulative net interest charges will total roughly $13
trillion, according to the CBO. So, all the collections from the Harris
tax hikes would help service the national debt predicted to top $50
trillion by 2034 rather than balance the books. Consider this: In the
first 11 months of the current fiscal year, nearly half of all
individual income tax collections have been dedicated to interest
charges.
Even if interest payments were not included in the budget, tax hikes
from a potential Harris-Walz administration would still fail to address
the enormous imbalance. Over the next decade, cumulative outlays and
revenues are projected to be $72 trillion (not including interest costs)
and $63 trillion, respectively. This leaves a $9 trillion hole.
A Fiscal Mess
The deteriorating fiscal health is so severe that even $5 trillion in
tax hikes would be insufficient to pay Americas bills. It would be
absurd to think that federal spending would be reined in with an
injection of exorbitant receipts, meaning Uncle Sams financial
situation would only worsen. Eminent economist Milton Friedman had it
right when he wrote, Government will spend whatever the tax system
raises, plus as much more as they can get away with. Indeed, a $5
trillion tax increase means $5 trillion more to spend for Democrats on
the welfare state and Republicans on the military-industrial complex