You have probably heard of President Biden’s next huge government spending plan, the $1.75 trillion “Build Back Better” (BBB) legislation he’s been trying to pass for months. Remember this plan was originally $3.5 trillion in size, but the president was forced to scale it back to $1.75 trillion due to widespread opposition. What Biden wants to do is push through many new socialist programs. His bill will put millions more Americans on some form of welfare. And that’s not even getting into the many changes this bill would bring to our economy, major industries and our way of life.
But here’s the main problem: President Biden has repeatedly promised the BBB will cost nothing. It would be paid for by increased taxes on wealthy Americans and corporations, increased regulations and fees on many industries and more aggressive tax collection by the IRS, he says. Many of us didn’t believe him, of course. And how do you figure increased taxes, regulations and more aggressive tax collection are not costs to the taxpayers? Only the Democrats could make such a claim.
This week, the Director of the nonpartisan Congressional Budget Office said the BBB proposal would yield far less revenue than what the White House is claiming to help pay for its bill — about $120 billion over a decade versus the $400 billion that the administration has been promising. Obviously, that is a huge difference! The CBO is hoping to release its final cost estimate of BBB by tomorrow. If the projected revenues are remotely as small as the CBO Director hinted this week, many Democrats may join Republicans and oppose the bill. Already, five Democrats have jumped ship, and the House can only afford to lose three.
So, the BBB may already be dead even before tomorrow’s expected report from the CBO. Let’s hope so. Speaker Pelosi vowed this week that House members may not leave Washington until the BBB is passed, but since they don’t appear to have the votes to pass it, I fully expect all members of Congress to go home for the Thanksgiving holiday. I don’t see a vote anytime soon, or maybe ever, especially if the CBO cost report looks bad tomorrow. At the very least, I expect the House to postpone the vote until sometime closer to the Christmas recess. We’ll see.
Biden, Democrats Want to Tax Income Not Even Earned Yet
President Biden and Speaker Pelosi have a host of tax increases planned for the Build Back Better legislation, including some real doozies. We may not know all of them until we see the CBO’s cost/revenue report tomorrow. But perhaps the most egregious is the president’s desire to change the tax code to levy income taxes on unearned income. Yes, you read that right.
The far-Left now has its heart set on taking away not just the income we earn but also unearned income of wealthier Americans. It is an unprecedented and deeply stupid idea based on a form of class envy that most Americans just don’t feel.
This is why Democrats have graduated from double-taxing dead people through the inheritance tax to wanting to tax live people for “income” they haven’t even earned yet. For example, in leftist House Rep. Pramilla Jayapal’s mind, Elon Musk “made” $36 billion earlier this month because his Tesla stock went up that much. Never mind that he didn’t sell that stock and might not want to or be able to for many reasons unrelated to taxation (such as corporate governance).
Income taxes have their downsides, but the reason they are attractive, reliable sources of revenue is that earners, by definition, bring in cash as the tax comes due. The compliance rate would be much, much lower, even among the wealthy, if people were constantly forced to liquidate assets in order to keep square with the government.
The practice of taxing gains as they are realized follows this reasoning. It also bows to the inconvenient reality that the market only truly decides the value of something, even of a stock, when it is sold, through the price that buyer and seller agree to. Large, forced stock transactions by wealthy people to pay hundreds of millions in taxes on “gains” not yet taken would affect market prices and the economy.
If a rich taxpayer wants to hold on to his appreciated stock — he has every right to, as it is his property – until he/she decides to sell it. Then it would be foolish and counterproductive to make that person liquidate other assets, such as companies which employ hundreds or thousands of people, just to satisfy a tax bill based on an arbitrary valuation of his/her so-called “tradable” assets.
The good news is I believe there is no chance President Biden and the far-Left Democrats will seriously pursue taxing unearned income. For one, it would be hugely unpopular. More importantly, the fact is a federal tax on “wealth growth” (unearned income) is both unconstitutional and impractical.
What you call “unearned income” should properly be called “unrealized income”.
The IRS considers unearned income to include dividends, interest, capital gains and other income from investments, as distinct from earned income from employment and business.