I find it interesting that we should cast our POTUS vote based upon what a self-professed pundit publishes in his/her Twitter account.
The driving factor is net pay – it’s not what you make, it’s what you keep. Let’s assume that Biden’s plan will not increase individual rates for the 91.5%. It also calls for:
• 33% increase in corporate tax rates
• 15% corporate minimum tax
• 100% increase in GILTI
This, combined with the proposed higher individual tax rates, causes “tax incidence consequences” whereby an individual’s net indirect effective taxes are higher, thus causing their net-take-home-and-keep to be less. Tax-wise, corporations are nothing more than a group of individuals and an entity for which to distribute the tax burden.
Middle-income households would see slightly higher rates due to indirect effects of higher corporate taxes. For example, the middle 20% of earners, who now pay an indirect effective tax rate of 16.9%, would owe 17.3% under Biden.
Also look at the composition of “the Rich”, for which everybody gets up in arms and screams that “the Rich” should pay more taxes since they are “the Elite”: as much as 94% of all businesses in the U.S. are in the form of pass-throughs and account for as much as 58% of all business income. Increasing the individual tax on “the Rich” thus means the 94% may also pay a higher corporate income tax rate…lowering net cash available…lowering investment…lowering labor demand…stifling worker wages…far hurting those in lower brackets than any other.
So, while the 91.5% Tweet may be true, open eyes and minds must evaluate the entire Plan in its entirety to get the full cash effect on the individual taxpayer. “Cash is King” as I heard once long ago.
The interconnection between taxes, the economy, and keep-home pay can’t be underestimated and shouldn’t be crowed about in a single Tweet without understanding the full and underlying consequences.