John Kartch

Pennsylvania Can't Afford Biden's Tax Increases

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Posted by John Kartch on Saturday, May 18th, 2019, 1:03 AM PERMALINK

 

Today at 1:00 p.m. Joe Biden will host a major rally in Philadelphia, where he will repeat his vow to repeal the Tax Cuts and Jobs Act.

“First thing I’d do is repeal those Trump tax cuts,” said Biden on May 4 in South Carolina.

"When I'm president, if God willing I am, we're going to reverse those Trump tax cuts," Biden said this week in New Hampshire.

Biden's promise to repeal the tax cuts is a threat to raise taxes. Repeal of the tax cuts would hit Pennsylvania hard:

  • Pennsylvania households would lose their tax cut -- a 24.5 percent tax cut on average, according to data reported by H&R Block.
     
  • Pennsylvania residents would again be forced to pay the highly regressive Obamacare individual mandate tax. 166,680 Pennsylvanians paid the tax totaling $108,842,000 according to the most recent IRS annual statistics ((2016). 81 percent of people hit with the tax made less than $50,000 a year, and 40 percent made less than $25,000 a year. This tax was one of the many violations by Biden of his pledge against any and all middle class taxes.
     
  • 840,000 Pennsylvania households who claim the Child Tax Credit would see the credit slashed in half from $2,000 to $1,000.
     
  • 4.4 million Pennsylvania households who claim the standard deduction would see it slashed in half. (TCJA nearly doubled the standard deduction from $6,300 to $12,200 for an individual and from $12,600 to $24,000 for a family.)
     

The tax cuts are helping a long list of Pennsylvania businesses give pay increases, benefit increases, and bonuses. For example:

  • Uncle Charley's Sausage (Vandergrift, PA) hired new employees, purchased new equipment including a new sausage stuffer, and added a new production line.
     
  • Hudson Facades (Linwood, PA) increased base pay and put $3,000 into every factor worker's 401(k) account.
     
  • Almo Corporation, the Philadelphia-based appliance distributor, is investing in a new distribution center and an ongoing headquarters renovation that can accommodate 65 additional employees.
     
  • Guy Chemical Company (Somerset, PA) increased wages, bonuses, and investment in new equipment including a new forklift, new laboratory furnishings, updated computer equipment, and a new software system.
     
  • Dollar Bank (Pittsburgh, PA) gave $2,000 permanent raises for employees making $60,000 or below.
     

If Biden repealed the tax cuts, Pennsylvanians would also be stuck paying higher utility bills because the corporate tax rate would revert back to 35 percent. Thanks to the Tax Cuts and Jobs Act, the corporate rate was reduced to 21 percent, and as a direct result PA utility companies passed on these savings to customers in the form of lower electric, water, and gas bills.

Examples include Pike County Light & Power Company, PPL Electric Utilities Corporation, Wellsboro Electric Company, West Penn Power Company, PECO Energy Company, Peoples Gas Company, UGI Central Penn Gas Inc., Pennsylvania American Water Company, and Citizens Electric Company of Lewisburg.

From a nationwide perspective, if Biden repeals the Tax Cuts and Jobs Act, the following would happen:

  •  A family of four earning the median income of $73,000 would see a $2,000 tax increase.
     
  • A single parent (with one child) making $41,000 would see a $1,300 tax increase.
     
  • Millions of low and middle income households would be stuck paying the Obamacare individual mandate tax.
     
  • Utility bills would go up in all 50 states as a direct result of the corporate income tax increase.
     
  • Small employers will face a tax increase due to the repeal of the 20% deduction for small business income.
     
  • The USA would have the highest corporate income tax rate in the developed world.
     
  • Taxes would rise in every state and every congressional district.
     
  • The Death Tax would ensnare more families and businesses.
     
  • The AMT would snap back to hit millions of households.
     
  • Millions of households would see their child tax credit cut in half.
     
  • Millions of households would see their standard deduction cut in half, adding to their tax complexity as they are forced to itemize their deductions and deal with the shoebox full of receipts on top of the refrigerator.
     

As noted by the New York Times, thanks to the GOP tax cuts, “Most people got a tax cut.”

The NYT also stated: “To a large degree, the gap between perception and reality on the tax cuts appears to flow from a sustained — and misleading — effort by liberal opponents of the law to brand it as a broad middle-class tax increase.”

The Washington Post also stated: “Most Americans received a tax cut.”

More evidence of the benefits flowing from the tax cuts can be found in a recent H&R Block report, which stated, “overall tax liability is down 24.9 percent on average.”

In Biden's home state of Delaware, the report found that residents received a 24.6% reduction in their taxes, on average.

Biden and the rest of the 2020 Democrats have thoroughly convinced themselves the tax issue is dead, but Americans will have their own say at the ballot box.

"Joe Biden is not Methuselah. He is Walter Mondale part deux," said Grover Norquist, president of Americans for Tax Reform. In 1984 Mondale famously promised to raise taxes if elected. He lost to Ronald Reagan in the electoral college 525-13, winning only his home state of Minnesota and the District of Columbia.

See also:

Biden: “First thing I’d do is repeal those Trump tax cuts.”

Joe Biden broke his middle class tax pledge

Kamala Harris Vows Repeal of Tax Cuts “on Day One”

“Mayor Pete” Calls for Steep Tax Hike on Homes and Businesses

Biden: “When I’m President, if God willing I am, we’re going to reverse those Trump tax cuts.”

 

 

Photo Credit: Marc Nozell/Flickr

More from Americans for Tax Reform


Dems Set Biden Up to Break Tax Pledge

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Posted by John Kartch on Thursday, September 16th, 2021, 2:02 PM PERMALINK

Congressional Democrats are pushing a series of tax increases that hit households making less than $400K, setting up President Biden to break his tax pledge.

Biden and Vice President Harris made the $400K tax pledge a key part of the 2020 presidential campaign, clearly stating the commitment at least 60 times.

Below is the video and written documentation of this promise:

Click here for the short version of the video with 13 examples of the pledge.

Click here for the full version of the video with every instance of the pledge.

Click here for a 45-second sizzle reel of the pledge.

The full written documentation of the pledge can be found below:

Joe Biden on CNBC, May 22, 2020: "Nobody making under 400,000 bucks would have their taxes raised. Period. Bingo."

Joe Biden on ABC News, August 23, 2020:

Joe Biden in Kenosha, Wisconsin on September 3, 2020: "I pay for every single thing I’m proposing without raising your taxes one penny. If you make less than 400 grand, you’re not going to get a penny taxed."

Joe Biden during a WFLA Interview on September 15, 2020: “Nobody making less than $400,000 have to pay a penny more in tax under my proposals.”

Joe Biden during a Telemundo Interview on September 15, 2020: "I'm not going to raise taxes on anybody making less than 400,000.”

Joe Biden on Twitter, September 17, 2020: “If you make under $400,000, you will not pay a penny more in taxes when I'm president."

Joe Biden on Twitter, September 17, 2020: "No surprise, Donald Trump is lying about my tax plan. Here’s the truth about how I’ll make corporations pay their fair share while ensuring Americans making under $400,000 don’t pay a penny more."

Joe Biden in Hermantown, Minnesota on September 18, 2020 "And I’ll do it without raising anyone’s taxes if you make less than $400,000 a year."

Joe Biden in Manitowoc, Wisconsin on September 21, 2020: “Under my plan nobody making less than 400,000 bucks -- and I don’t make it and you don’t make it, I don’t think -- in this country will see their taxes go up.”

Joe Biden in Greensburg, Pennsylvania on September 30, 2020: “And we’re going to do it without asking anyone who makes under $400,000 a year to pay one more penny in taxes. Guaranteed. My word on it.”

Joe Biden in Jonestown, Pennsylvania on September 30, 2020: “We’re going to do it all without raising a penny in taxes for anybody who makes less than $400,000 a year.”

Joe Biden in Grand Rapids, Michigan on October 2, 2020: “Anyone making less than $400,000 a year won’t pay a penny more."

Joe Biden in Miami, Florida on October 5, 2020: “I’m not going to raise taxes on anyone who makes less than $400,000 a year. You won’t pay a penny more. I guarantee you.”

Kamala Harris during Vice Presidential Debate on October 7, 2020: “Joe Biden has been very clear. He will not raise taxes on anybody who makes less than $400,000 a year.”

Joe Biden on Twitter, October 7, 2020: “Let me be clear: A Biden-Harris Administration won't increase taxes by a dime on anyone making less than $400,000 a year.”

Joe Biden in Las Vegas, Nevada on October 9, 2020: “It’s not going to raise a penny in tax for anyone making less than $400,000 a year. Not a penny.”

Kamala Harris on Twitter, October 9, 2020: “Joe Biden has been very clear: he will not raise taxes on anybody who makes less than $400,000 a year.”

Joe Biden in Erie, Pennsylvania on October 10, 2020: “I’m not going to raise taxes on anybody making less than 400 grand.”

Joe Biden in Toledo, Ohio on October 12, 2020: “I’m not going to raise taxes on anyone who makes less than $400,000 a year."

Joe Biden in Pembroke Pines, Florida on October 13, 2020: “I’m not going to raise taxes on a single solitary American making less than $400,000 a year. You won’t pay a penny more. It’s a guarantee.”

Joe Biden on Twitter, October 15, 2020: “Let me be very clear: If you make under $400,000 you won’t pay a penny more in taxes under my administration.”

Joe Biden ABC Town Hall on October 15, 2020: 

Joe Biden in Michigan on October 16, 2020: “No one who makes less than $400,000 a year will pay a penny more.”

Kamala Harris in Orlando, Florida on October 19, 2020: “Joe Biden will not increase taxes on anyone who makes less than $400,000 a year, period.”

Kamala Harris in Jacksonville, Florida on October 19, 2020: “Taxes will not be raised on anyone making less than $400,000 a year.”

Kamala Harris in Milwaukee, Wisconsin on October 20, 2020: “We will not increase taxes for anybody making under $400,000 a year.”

Kamala Harris in Asheville, North Carolina on October 21, 2020: “Joe Biden is saying, I’m not going to raise taxes on anybody who makes less than $400,000 a year.”

Kamala Harris in Atlanta, Georgia on October 23, 2020: “Which is why Joe Biden and I are saying, “One, taxes will not be raised on anyone making less than $400,000 a year.”

Joe Biden in Bucks County, Pennsylvania on October 24, 2020: “None of you will have your taxes raised. Anyone making less than $400,000 will not see a penny in taxes raised."

Joe Biden on CBS 60 Minutes, October 25, 2020:

Biden: “Nobody making less than $400,000 will pay a penny more in tax under my proposal.”

Norah O'Donnell, CBS: "That's a promise?"

Biden: "That's a guarantee. A promise. I give you my word as a Biden. That's an absolute guarantee."

Joe Biden in Atlanta, Georgia on October 27, 2020: “I guarantee you -- no matter what you hear this president lying about -- no one making less than $400,000 a year will have one penny in taxes raised. Not one penny. It’s a guarantee.”

Kamala Harris in Reno, Nevada on October 27, 2020: "Joe Biden says we’re not going to increase taxes on anyone making less than $400,000 a year."

Kamala Harris in Las Vegas, Nevada on October 27, 2020: “Joe Biden says, that we’re not going to raise taxes on anyone making less than $400,000 a year."

Joe Biden in Atlanta, Georgia on October 27, 2020: “No one making less than $400,000 a year will have one penny in taxes raised. Not one penny. It's a guarantee.”

Kamala Harris in Phoenix, Arizona on October 28, 2020: “We are not going to raise taxes on anyone making under $400,000 a year."

Kamala Harris in Tucson, Arizona on October 28, 2020: “Joe Biden who says, 'You want to deal with the economy, then one, we will not raise taxes on anyone making less than $400,000 a year.'"

Joe Biden in Broward County, Florida on October 29, 2020: “We can do it without raising taxes on a single person making less than 400,000 bucks a year.”

Joe Biden in Tampa Bay, Florida on October 29, 2020: “I guarantee you -- my word as a Biden -- no one making less than $400,000 will pay a single penny more in taxes. Not a penny.”

Kamala Harris in Fort Worth, Texas on October 30, 2020: “Joe Biden is committed to not raising taxes ever on anyone making less than $400,000 a year.”

Joe Biden in Des Moines, Iowa on October 30, 2020: “We can do it without raising a penny tax on the middle class. I guarantee you -- give you my word as a Biden -- no one making less than $400,000 a year will see a penny in their taxes raised, no one.”

Kamala Harris in McAllen, Texas on October 30, 2020: “Let’s deal with the economy and not raise taxes for anyone who makes less than $400,000.”

Joe Biden in St. Paul, Minnesota on October 30, 2020:  “I promise you, you have my word, if you make less than $400,000 a year, you won’t pay a penny more in taxes.”

Joe Biden in Milwaukee, Wisconsin on October 30, 2020: “I give you my word as a Biden, if you make less than $400,000 -- if I’m elected president -- you’re not going to see a penny of your taxes go up, not a penny.”

Kamala Harris in Houston, Texas on October 30, 2020: “Joe Biden says we will not raise taxes on anyone that makes less than $400,000 a year.”

Kamala Harris in Fort Worth, Texas on October 30, 2020: “Which is why Joe Biden is committed to not raising taxes ever on anyone making less than $400,000 a year.”

Joe Biden in Detroit, Michigan on October 31, 2020: “Under my plan if you make less than $400,000 I guarantee you're not going to pay a penny more in taxes.”

Joe Biden in Flint, Michigan on October 31, 2020: “Under my plan, if you make less than $400,000 a year, you’re not going to pay a penny in additional taxes.”

Joe Biden on Twitter, November 1, 2020: "Under my tax plan, no one making under $400,000 will see their taxes go up."

Joe Biden in Cleveland, Ohio on November 2, 2020: “Under my plan, if you make less than $400,000, you won’t pay a single penny more in taxes. You have my word on it.”

Joe Biden in Beaver County, Pennsylvania on November 2, 2020: “We’re not going to raise taxes on anybody making less than 400,000 bucks a year.”

Joe Biden in Pittsburgh, Pennsylvania on November 2, 2020: "Under my plan I commit to you no one making less than 400 grand is going to see a penny in taxes raised."

Kamala Harris in Pittsburgh, Pennsylvania on November 2, 2020: “Let me be clear, Joe and I will not increase taxes on anyone making under $400,000 a year, period.”

Joe Biden in Pittsburgh, Pennsylvania on November 2, 2020: “Under my plan, as Kamala said, if you make less than 400,000 bucks, you’re not going to pay a penny more in taxes.”

Kamala Harris in Detroit, Michigan on November 3, 2020: “That’s why Joe says we’re not passing any taxes on anybody making less than $400,000 a year."

Kamala Harris on Twitter,  November 11, 2020: “As president, @JoeBiden will make corporations and the wealthiest finally pay their fair share—and he won’t ask a single person making under $400,000 per year to pay a penny more in taxes."

Kamala Harris on Twitter, November 21, 2020: “Let’s be clear: if you make under $400,000 a year, you won’t pay a penny more in taxes under a Biden-Harris administration.”

Joe Biden during an ABC News interview on March 16, 2021: "If you make more than -- less than $400,000, you won't see a fed -- one single penny in additional federal tax."

Joe Biden during remarks in Washington, D.C. on April 2, 2021: "And it won’t raise a penny tax on a family making less than $400,000 a year — no federal tax, no addition."

Joe Biden during remarks in Washington, D.C. on April 7, 2021: "I will not impose any tax increases on people making less than $400,000 a year."

Joe Biden during a speech in Washington, D.C. on April 28, 2021: "I will not impose any tax increases on people making less than $400,000 a year.  

Joe Biden during a speech in Portsmouth, Virginia on May 3, 2021: "The reason I’m bothering to do this is I keep hearing out in the press, 'Biden is going to raise your taxes.'  Anybody making less than $400,000 a year will not pay a single penny in taxes."

Photo Credit: By Gage Skidmore licensed under CC BY-SA 2.0


Dem Bill Gives Tax Cuts to Reporters at "Local Newspapers" With Up to 750 Employees

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Posted by John Kartch, Mike Mirsky on Wednesday, September 15th, 2021, 3:49 PM PERMALINK


Congressional Democrats have proposed a tax credit for "local news journalists" at newspapers with up to 750 employees. Yes, a special tax cut for reporters.

The Democrats' multi-trillion-dollar tax and spend plan contains an employment tax credit of up to $12,500 per person for reporters at “eligible” newspapers. As a section-by-section analysis from the Ways and Means Committee details

“The credit amount is equal to 50% of wages for each of the first 4 calendar quarters, and 30% of wages for each calendar quarter thereafter. Eligible local newspaper publisher is any employer that is in the trade or business of publishing a local newspaper that serves the needs of a regional or local community and who employs no more than 750 employees.”  

This special reporter tax carve-out would amount to $1.3 billion. Beneficiaries would likely include many established daily newspapers and left-leaning alternative weeklies, and such papers as The Malibu Times, Aspen Times and the Vineyard Gazette serving the progressive playground of Martha’s Vineyard.

The bill also provides a $1,500 tax credit for the purchase of an "e-bike" costing up to $8,000. So if you are a "local" journalist in the market for an e-bike, your ship has come in.

Photo Credit: "Journalist with pipe" by C.A.D.Schjelderup licensed under CC BY-SA 4.0


VIDEO: JCT Confirms Dem Corporate Tax Hike Hits Workers

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Posted by John Kartch, Isabelle Morales on Tuesday, September 14th, 2021, 3:48 PM PERMALINK


Today the Joint Committee on Taxation confirmed that corporate tax rate hikes diminish the wages of workers. Testifying before the House Ways & Means Committee, JCT Chief of Staff Thomas A. Barthold said:

"Literature suggests that 25% of the burden of the corporate tax may be borne by labor in terms of diminished wage growth."

Congressman Mike Kelly (R-Pa.) then asked, "Who is going to bear the brunt of this [Democrat corporate income tax hike]?

Barthold replied:

"Labor. Laborers."

WATCH:

Economists across the political spectrum agree that workers bear the brunt of corporate tax increases. And 25% is on the very low end.

According to the Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax:

"Over the last few decades, economists have used empirical studies to estimate the degree to which the corporate tax falls on labor and capital, in part by noting an inverse correlation between corporate taxes and wages and employment. These studies appear to show that labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome."

A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003:

"We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that $1 of additional tax reduces wages by 92 cents in the long run. The incidence of a $1 fall in value added is smaller, consistent with our wage bargaining model."

A 2015 study by Kevin Hassett and Aparna Mathur found that a 1 percent increase in corporate tax rates leads to a 0.5 percent decrease in wage rates. The study analyses 66 countries over 25 years and concludes that workers could see a greater reduction in wages than the federal government raises in new revenue from a corporate income tax increase:

"We find, controlling for other macroeconomic variables, that wages are significantly responsive to corporate taxation. Higher corporate tax rates depress wages. Using spatial modelling techniques, we also find that tax characteristics of neighbouring countries, whether geographic or economic, have a significant effect on domestic wages."

A 2006 study by William Randolph of the Congressional Budget Office found that 74% of the corporate tax is borne by domestic labor:

"Burdens are measured in a numerical example by substituting factor shares and output shares that are reasonable for the U.S. economy. Given those values, domestic labor bears slightly more than 70 percent of the burden of the corporate income tax."

A 2007 study by Alison Felix estimated that a 1 percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. She concluded that the wage reductions are over four times the amount of collected corporate tax revenue:

"The empirical results presented here suggest that the incidence of corporate taxation is more than fully borne by labor. I estimate that a one percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. The magnitude of the results predicts that the decrease in wages is more than four times the amount of the corporate tax revenue collected."

A 2012 Harvard Business Review piece by Mihir A. Desai notes that raising the corporate tax lands “straight on the back” of the American worker and will see a decline in real wages:

"Because capital is mobile, high tax rates divert investment away from the U.S. corporate sector and toward housing, noncorporate business sectors, and foreign countries. American workers need that capital to become more productive. When it’s invested elsewhere, real wages decline, and if product prices are set globally, there is no place for the corporate tax to land but straight on the back of the least-mobile factor in this setting: the American worker."

Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor:

"In calculating distributional effects, the Urban-Brookings Tax Policy Center (TPC) assumes investment returns (dividends, interest, capital gains, etc.) bear 80 percent of the burden, with wages and other labor income carrying the remaining 20 percent."

More from Americans for Tax Reform


Heitkamp Warns Dems Not to Impose Second Death Tax

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Posted by John Kartch on Wednesday, September 1st, 2021, 1:37 PM PERMALINK

"I'm trying to sound the alarm both economically and politically for Democrats."

Today on CNBC's SquawkBox, Democratic former North Dakota Sen. Heidi Heitkamp sent a warning to Democrats who are thinking about killing stepped-up basis. Taking away stepped-up basis -- as President Biden has proposed -- would impose a second Death Tax on the American people:

"I'm trying to sound the alarm both economically and politically for Democrats, that this is not a path to walk, which is taxing unrealized gain.

You can look at different strategies for stepped-up basis, for realizing some income tax when that asset is eventually sold, but the disruption that this would create for small family businesses and for farmers and for family assets is just not worth the pain. In fact, ironically when it's polled, 70% of democrats agree with me that death should not be the taxable event."

Click here or below to view the video clip:


How Biden's Capital Gains Tax Rate Hike Targets Hard Working Americans

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Posted by John Kartch on Friday, August 27th, 2021, 5:20 PM PERMALINK

President Biden has vowed to nearly double the capital gains tax 39.6%, the highest rate since Jimmy Carter in 1977. This will impose a capital gains tax rate twice as high as communist China, and it will hit Americans who have worked hard and lived modestly for decades.

For example, the Wall Street Journal interviewed Kentucky resident Paul Settle, who will get whacked with a $390,000 Biden capital gains tax hike:

Five brick apartment buildings in this horse-country town make up Paul Settle’s retirement nest egg. He purchased the complex 27 years ago and has spent almost every day since tidying the grounds, repairing garbage disposals and collecting rent checks.

Mr. Settle, 64 years old, pays himself about $75,000 a year. The idea was always to one day sell and retire off the proceeds.

But now his plans are on hold. The Biden administration’s tax proposal would increase the capital-gains taxes Mr. Settle would pay on the sale of the apartments, which he expects to fetch over $2 million. Mr. Settle’s tax adviser estimates the changes could halve his after-tax proceeds to about $400,000 after paying off the mortgage.

“I’m in limbo,” he said.

--

Mr. Settle used a mortgage to buy the apartments in Versailles (pronounced “Ver-sayles”) for $1.3 million in 1994, seven years after they were built. The complex sits next to a large park in a quiet residential neighborhood with single-family homes. It isn’t far from the former orphanage where his father grew up.

Settle does the repairs and cleans the apartments himself:

He visits the apartments daily, sweeping the laundry room before working on repairs and grabbing a fast-food lunch. He still cleans each unit himself when a tenant moves out.

This spring, he saw a television segment on the proposed increase in capital-gains rates. He thought it might not apply to him, but called his tax adviser to be sure. Mr. Settle, who voted for Mr. Biden, was stunned to learn the extent of the hit.

Eyeing retirement, Settle looked to sell the apartments but learned the Biden plain would cost him an additional $390,000 in taxes:

Under current rates, Mr. Settle’s tax adviser estimates that he would pay just under $500,000 in federal taxes on such a sale. That would leave him with about $800,000 after paying the mortgage, state and local taxes. Under the Biden plan, Mr. Settle would owe around $390,000 more in taxes, leaving him with about $400,000, his tax adviser estimates.

--

Anything close to $400,000 won’t be enough to retire on, he said, especially if he inherits his father’s longevity.

For now, Mr. Settle continues his daily rounds.

There are hard working people like Mr. Settle in every town in America who quietly work and save for decades to build up a retirement nest egg. They are the backbone of Main Street and the small business community. Biden and congressional Democrats are targeting them for a tax increase and dismissing them as something resembling Scrooge McDuck and Rich Uncle Pennybags.

Under Biden’s plan many taxpayers will pay a capital gains rate higher than 50%:

Californians will pay a top capital gains tax rate of 56.7 percent (39.6% + 3.8% NIIT + 13.3% CA state rate).

New Yorkers will pay a top capital gains rate of 52.2%

New Jersey taxpayers will pay a top capital gains tax rate of 54.14%.

Biden's plan will wallop America just as the country is trying to dig out from the pandemic. The plan also puts the USA at a competitive disadvantage vs. our economic competitors.

When comparing Biden's capital gains tax plan to China, the state capital gains tax burden must be included.

China's Capital Gains Rate: 20% 

United States Under Biden Plan: 48.8% (39.6% + 3.8% Obamacare tax + 5.4% state average)  

Photo Credit: Phil Roeder


Democrat Heidi Heitkamp Opposes Biden's Plan to Kill Stepped-Up Basis

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Posted by John Kartch on Friday, August 27th, 2021, 11:50 AM PERMALINK

Prominent farm-state leader Heidi Heitkamp (D-N.D.), a former U.S. Senator who endorsed Joe Biden for President, has come out in opposition to President Biden's plan to kill stepped-up basis.

As reported today in The Hill:

Former Sen. Heidi Heitkamp (D-N.D.) is leading a new effort to push back against proposals to tax capital gains at death, as the Biden administration and Democratic lawmakers seek to make such a change to help pay for their spending priorities.

“I think it’s wrong as a matter of economics, looking at middle class families, but I also think that for the Democratic Party, this is a path that should not be walked politically,” Heitkamp said in a phone interview with The Hill.

Heitkamp, who served in the Senate from 2013-2019, is chair of a new nonprofit called Save America’s Family Enterprises (SAFE), which is launching a six-figure ad campaign.

Biden has arrogantly dismissed stepped-up basis as just a "little thing" he wants to eliminate.

But Heitkamp noted one of the many ways the Biden proposal would hit farmers:

“Now that we see an emerging entrepreneurial class within the Hispanic community and within the African American community, they won’t be able to take advantage of these tax rules that will allow them to grow their business and keep capital in their business,” she said.

Heitkamp also said that taxing capital gains at death carries political risks for Democrats, referencing a poll SAFE conducted that found that more voters were opposed to a bill on this topic than supported it.

“I think it won’t be well-received by the public,” she said.

House Agriculture Committee Chairman David Scott (D-Ga.) also opposes the Biden plan

In a recent letter to Biden, he wrote:

I have serious concerns about proposed changes in tax provisions that could hurt our family farmers, ranchers and small businesses.

I am very concerned that proposals to pay for these investments could partially come on the backs of our food, fiber, and fuel producers. In particular, “step-up in basis” is a critical tool enabling family farming operations to continue from generation to generation. The potential for capital gains to be imposed on heirs at death of the landowner would impose a significant financial burden on these operations. Additionally, my understanding of the exemptions is that they would just delay the tax liability for those continuing the farming operation until time of sale, which could result in further consolidation in farmland ownership. This would make it more difficult for young, beginning, and socially disadvantaged farmers to get into farming. 

While I appreciate that the proposal provides for some exemptions, the provisions could still result in significant tax burdens on many family farming operations.

Montana Senator Jon Tester (D), a farmer, also opposes the Biden plan.

Tester said:

"I'm a small farmer in eastern Montana, and it would have significant effects on me."

Biden's proposal violates his pledge against any tax increase on any American making less than $400,000 per year. His proposal contains no exemption for these Americans.

 

 


Biden's Second Death Tax Will Kill Farms

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Posted by John Kartch on Monday, August 23rd, 2021, 2:00 PM PERMALINK

Taking away stepped-up basis would impose $680,000 tax on typical Iowa farm

Dem Ag Committee Chairman: "This would make it more difficult for young, beginning, and socially disadvantaged farmers to get into farming."

President Biden's plan to take away stepped-up basis will impose a second Death Tax on the American people. It will hit a typical Iowa farm with $680,000 in new taxes.

As noted by the Iowa Torch:

The planned exemption for a married couple is a million dollars. Any excess would likely be taxed at about 40%. Given the average Iowa farm size of 359 acres at the current value of $7,559 per acre, that would leave the couple with $1.7 million exposed to taxes.

That amount is after the exemption is figured. The tax bill could reach as much as $680,000.

Biden and congressional Democrats are right now trying to eliminate step-up in basis. Elimination of stepped up basis would impose an automatic capital gains tax at death -- separate from, and in addition to -- the Death Tax.

This forced capital gains tax from Biden will hit Americans regardless of whether assets are sold or kept.

In this video, you can see a sample of the many times Biden has threatened to eliminate step-up in basis.

PUSHBACK FROM CONGRESSIONAL DEMOCRATS

But Democrats are getting an earful from their constituents. And some prominent Democratic congressmen are sounding the alarm.

House Agriculture Committee Chairman David Scott (D-Ga.) sent a letter to Biden stating:

I have serious concerns about proposed changes in tax provisions that could hurt our family farmers, ranchers and small businesses.

I am very concerned that proposals to pay for these investments could partially come on the backs of our food, fiber, and fuel producers. In particular, “step-up in basis” is a critical tool enabling family farming operations to continue from generation to generation. The potential for capital gains to be imposed on heirs at death of the landowner would impose a significant financial burden on these operations. Additionally, my understanding of the exemptions is that they would just delay the tax liability for those continuing the farming operation until time of sale, which could result in further consolidation in farmland ownership. This would make it more difficult for young, beginning, and socially disadvantaged farmers to get into farming. 

While I appreciate that the proposal provides for some exemptions, the provisions could still result in significant tax burdens on many family farming operations.

STEPPED UP BASIS WAS ONCE KILLED IN THE 1970s, WITH DISASTROUS RESULTS

Biden was in the Senate the last time congress took away stepped up basis. In 1976 congress eliminated stepped-up basis but had to reverse course.

As noted in a July 3, 1979 New York Times article, it was "impossibly unworkable":

Almost immediately, however, the new law touched off a flood of complaints as unfair and impossibly unworkable. So many, in fact, that last year Congress retroactively delayed the law's effective date until 1980 while it struggled again with the issue.

As noted by the NYT, intense voter blowback ensued:

Not only were there protests from people who expected the tax to fall on them -- family businesses and farms, in particular -- bankers and estate lawyers also complained that the rule was a nightmare of paperwork.

So, Biden saw all of that first hand and STILL wants to take away stepped-up basis. Iowa Senator Chuck Grassley has a powerful op-ed in the Wall Street Journal on this episode.

Grassley writes:

I introduced Arley Wilson, an Iowa “country lawyer” who schooled policy makers on the impracticality and inefficiency of the tax law. He brought 35 years of experience in probate to the table. He explained how its application on top of the estate tax would be the “death knell” for family farms and small businesses. Among other issues, it would require complex reconstruction of the decedent’s assets, give rise to extended audits, and trigger litigation for next of kin. Eliminating step-up in basis is another post-death tax grab, adding punitive taxes on thrift, savings and investments.

Congress realized its mistake and voted in 1978 to suspend carryover basis and repeal it in 1980—both with then-Sen. Biden’s support. He’s forgotten the lesson he should have learned.

Four decades later Democrats want to dismantle a century-old tax law that has stitched the economic and social fabric of American agriculture together for generations. The 1921 Revenue Act codified step-up in basis at death. It has allowed property and livelihoods to be passed on to the next generation without a confiscatory tax.

HOW THE BIDEN PLAN WOULD WORK

In a Forbes piece titled "This Biden Tax Hike Hike Will Hit Mom & Pop Hard" tax lawyer Robert W. Wood writes:

Under current tax law, assets that pass directly to your heirs get a step-up in basis for income tax purposes. It doesn’t matter if you pay estate tax when you die or not. For generations, assets held at death get a stepped-up basis—to market value—when you die. Small businesses count on this.

Wood notes:

Biden's proposal would tax an asset's unrealized appreciation at transfer. You mean Junior gets taxed whether or not he sells the business? Essentially, yes. The idea that you could build up your small business and escape death tax and income tax to pass it to your kids is on the chopping block. Biden would levy a tax on unrealized appreciation of assets passed on at death. By taxing the unrealized gain at death, heirs would get hit at the transfer, regardless of whether they sell the asset.

As reported previously by CNBC:

“When someone dies and the asset transfers to an heir, that transfer itself will be a taxable event, and the estate is required to pay taxes on the gains as if they sold the asset,” said Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center. 

As reported by Richard Rubin of the Wall Street Journal:

Manufacturers and farmers, who tend to be more asset-rich and cash-poor, are watching closely for those details, concerned they might have to sell illiquid businesses to pay the taxes.

Courtney Silver, president of Ketchie Inc., a family-owned, 25-employee machine shop in Concord, N.C. that started in 1947, said she was concerned about the potential impact.

“I really can’t imagine being hit with that decision of that potential tax implication,” said Ms. Silver, 40 years old, who took over the business when her husband, Bobby Ketchie, died in 2014. “That to me is really hard to wrap my head around.”

It could be challenging for asset owners to figure out their tax basis, which is what they paid for the property and invested in it. That complexity is part of what doomed a similar proposal in the late 1970s, which Congress passed, then delayed, then repealed.

As noted in an Ernst and Young study, if a small business is unable to provide sufficient evidence to prove the cost basis of an asset, then it may set to $0. In other words, tax would be applied to the entire value of taxpayer assets:

“Family-owned businesses may also find it difficult to comply because of problems in determining the decedent’s basis and in valuing the bequeathed assets. It seems likely that these administrative problems could lead to costly disputes between taxpayers and the IRS. Additionally, if sufficient evidence is not available to prove basis, then $0 may be used for tax purposes. This may result in an inappropriately large tax at death.”

It is appalling that Biden is trying to take away stepped-up basis. He also wants to raise the federal corporate tax rate to a higher-than-China rate of 28% and wants to impose the highest capital gains tax since Jimmy Carter in 1977. His plan would also hit nearly two million small businesses with tax increases -- all while Americans try to dig out from the pandemic.

 


Biden and Pelosi Set to Impose Tax Hikes on Small Businesses

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Posted by John Kartch, Isabelle Morales on Friday, August 20th, 2021, 12:40 PM PERMALINK

[To book an interview on this topic please contact John Kartch at jkartch@atr.org]

During his campaign, President Biden promised the American people that he would not raise taxes on small businesses. Now he is violating that promise, and next week House Democrats will vote on the framework to make the tax hikes possible.

Biden's small business tax promise was made on Feb. 20, 2020 before a national audience during a Democratic debate hosted by MSNBC:

MSNBC's Hallie Jackson: "I want to ask you about Latinos owning one out of every four new small businesses in the United States. Many of them have benefited from President Trump's tax cuts, and they may be hesitant about new taxes or regulations. Will taxes on their small businesses go up under your administration?"

Biden: "No. Taxes on small businesses won't go up."

Click here or below to see Biden's broken pledge

Despite Biden's pledge, his tax hikes will hit small businesses.

The White House this week tried to downplay it by asserting Biden's increase in the top marginal income tax rate would "only" hit three percent of small businesses.

Three percent of 31.7 million small businesses is 951,000 small businesses. And the White House failed to mention the one million small businesses organized as C-corporations: the Biden plan calls for a federal corporate tax rate increase to a higher-than-communist China rate of 28 percent.

So that's at least 1.9 million small businesses that will get hit with Biden tax increases -- which does not even include the number of small businesses that would get hit from Biden's elimination of stepped-up basis.

The Tax Foundation notes that IRS statistics "show more than half of pass-through business income could face tax increases" under Biden.

Biden is pushing a series of tax increases on small businesses:

1. Biden's increase in the top marginal income tax rate to 39.6 percent will hit small business sole proprietorships, LLCs, partnerships and S-corporations.

Biden wants to raise the top marginal income tax rate to 39.6 percent which will hit many small businesses.

According to the Congressional Research Service, "The majority of both corporations and pass-throughs in 2011 had fewer than five employees (55% of C corporations and 64% of pass-throughs). Nearly 99% of both corporations and pass-throughs had fewer than 500 employees, the most common employment-based threshold used by the Small Business Administration (SBA)."

2. Biden’s corporate income tax rate hike from 21 percent to 28 percent targets one million small businesses across the country organized as corporations.

As noted by the Small Business Administration Office of Advocacy, there are 31.7 million small businesses in the U.S. Of those, 25.7 million have no employees, while 6 million have employees. Of these 6 million small employers, 16.8 percent, or 1 million of these businesses are classified as c-corporations. The SBA classifies a small employer as any independent business with fewer than 500 employees.

Biden claims his spending plan makes large corporations pay their “fair share.” However, the plan will raise taxes on many small businesses that are structured as corporations.

Also of note: a recent study from the U.S. Chamber of Commerce found that 1.4 million small businesses organized as C-corporations will get hit by Biden's corporate tax rate hike.

The Chamber noted the corporate income tax hike will hurt small businesses in every sector of the economy: “agriculture, construction, health care, real estate, finance, and more.” 

The analysis also details the state-by-state impact of this tax hike on small businesses: 

  • In Arizona, 31,315 employers will see their taxes increased, including 21,646 small businesses with fewer than 500 employees. Under Joe Biden’s plan, Arizona’s combined state and federal corporate tax rate would be 31.5 percent.  
  • In West Virginia, 6,081 employers will face tax hikes, including 4,203 small businesses. West Virginia’s state corporate tax rate, in addition to the federal 28 percent, would result in a 32.7 percent tax rate for these small businesses.  
  • In New Jersey, which has the highest corporate tax rate, 45,053 small businesses would face a combined state and federal corporate tax rate of 36.3 percent.  
  • Construction, retail trade, and professional/scientific/technical service industries across the nation would be hit the hardest by Biden’s tax hike. 


3. Biden's elimination of stepped up basis: A second death tax on small business.

Biden is targeting small businesses with a second Death Tax: Biden will eliminate step-up in basis. This is a devastating tax increase on small businesses. In this video, you can see a sample of the many times Biden has threatened to eliminate step-up in basis.

Elimination of stepped up basis would impose an automatic capital gains tax at death -- separate from, and in addition to -- the Death Tax.

In a Forbes piece titled "This Biden Tax Hike Hike Will Hit Mom & Pop Hard" tax lawyer Robert W. Wood writes:

Under current tax law, assets that pass directly to your heirs get a step-up in basis for income tax purposes. It doesn’t matter if you pay estate tax when you die or not. For generations, assets held at death get a stepped-up basis—to market value—when you die. Small businesses count on this.

Wood notes:

Biden's proposal would tax an asset's unrealized appreciation at transfer. You mean Junior gets taxed whether or not he sells the business? Essentially, yes. The idea that you could build up your small business and escape death tax and income tax to pass it to your kids is on the chopping block. Biden would levy a tax on unrealized appreciation of assets passed on at death. By taxing the unrealized gain at death, heirs would get hit at the transfer, regardless of whether they sell the asset.

As reported previously by CNBC:

“When someone dies and the asset transfers to an heir, that transfer itself will be a taxable event, and the estate is required to pay taxes on the gains as if they sold the asset,” said Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center. 

As reported by Richard Rubin of the Wall Street Journal:

Manufacturers and farmers, who tend to be more asset-rich and cash-poor, are watching closely for those details, concerned they might have to sell illiquid businesses to pay the taxes.

Courtney Silver, president of Ketchie Inc., a family-owned, 25-employee machine shop in Concord, N.C. that started in 1947, said she was concerned about the potential impact.

“I really can’t imagine being hit with that decision of that potential tax implication,” said Ms. Silver, 40 years old, who took over the business when her husband, Bobby Ketchie, died in 2014. “That to me is really hard to wrap my head around.”

It could be challenging for asset owners to figure out their tax basis, which is what they paid for the property and invested in it. That complexity is part of what doomed a similar proposal in the late 1970s, which Congress passed, then delayed, then repealed.

As noted in an Ernst and Young study, if a small business is unable to provide sufficient evidence to prove the cost basis of an asset, then it may set to $0. In other words, tax would be applied to the entire value of taxpayer assets:

“Family-owned businesses may also find it difficult to comply because of problems in determining the decedent’s basis and in valuing the bequeathed assets. It seems likely that these administrative problems could lead to costly disputes between taxpayers and the IRS. Additionally, if sufficient evidence is not available to prove basis, then $0 may be used for tax purposes. This may result in an inappropriately large tax at death.”

To honor his small business tax pledge to the American people, Biden must forego the above tax increases.

 

 

More from Americans for Tax Reform


Manchin Must Reject All Biden Tax Increases to Keep His Promise to West Virginians

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Posted by John Kartch on Wednesday, August 18th, 2021, 9:40 AM PERMALINK

"I can't look the people in West Virginia in the eye and ask them to pay a penny more until I know we're running this government efficiently."

When Joe Manchin asked West Virginians to send him to the Senate, he vowed that he would not raise a penny of taxes until the government was running efficiently. He also said taxes should not be raised during a recession.

Let's roll the tape of Manchin during a nationally televised Senate debate on Oct. 18, 2010:

"I can't look the people in West Virginia in the eye and ask them to pay a penny more until I know we're running this government efficiently."

This means Manchin cannot vote for any of President Biden's tax increases. Biden wants to impose the highest capital gains tax on Americans since Jimmy Carter in 1977. He wants to impose a corporate tax rate hike that would increase the cost of household goods and services. He wants to take away stepped-up basis, which would crush small businesses and farms and upend the ability to pass your belongings to your children.

As a candidate, Manchin correctly noted that it is a bad idea to raise any taxes during a recession:

"I don't think during a time of recession you mess with any of the taxes."

Americans are trying to dig out from the pandemic in a time of deep economic uncertainty. A Manchin vote for any tax increase now would certainly violate the letter and spirit of his twin tax commitments to West Virginians.

When Manchin asked the voters to send him to Washington, he vowed to oppose tax increases: Now he's threatening to impose tax hikes on West Virginia households and businesses. So what happened, Senator?

[Click here to view the video of Manchin's tax promises]

Photo Credit: Third Way


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