"The White House" by Radek Kucharski is licensed under CC BY 2.0 https://www.flickr.com/photos/137294100@N08/

President Biden’s Budget for Fiscal Year 2023 is chock-full of wasteful spending and $2.5 trillion in tax hikes on businesses and individuals over the next ten years. It remains to be seen how the administration can justify increasing taxes on businesses and individuals at a time when energy prices remain elevated, commodities across the board are extremely volatile, and the yield curve inversion is foreboding a recession.

Included in Biden’s budget are five finance-related provisions that impose new burdensome tax regimes, reduce private financing, and oppose free-market driven business operations.

Here are the five finance provisions that are especially onerous:

  1. President Biden’s plan asks Congress to write a bill that would restrict the usage of stock buybacks. Biden wants to tell businesses how to best distribute their own capital. What the administration fails to understand is that buybacks are a cash distribution to all investors that end up benefiting small private companies via redistribution of shareholder capital. Buybacks can also improve returns for 401ks and other retirement plans. Moreover, firms that perform stock buybacks outperform their peers. 
  2. Biden’s plan encourages the Department of Justice (DOJ) to pursue excessive scrutiny of mergers, especially bank mergers. Even as the number of unbanked households has decreased to unprecedented levels, and the number of bank branches increased by over 90 percent from the 1980s to 2020, Biden’s DOJ and FDIC are pursuing potentially costly changes to how bank mergers will be reviewed in the United States.  
  3. Biden’s plan would tax unrealized gains on digital assets. Unrealized gains on cryptocurrency transactions are included in Biden’s larger plan to tax unrealized gains of certain individuals. Any attempt to tax unrealized gains is a nonstarter, but it may also be unconstitutional
  4. Biden’s plan continues to cede the United States’ energy independence and dominance on the world stage by financing already heavily subsidized wind and solar projects. Biden wants to offer a $3.2 billion loan to Clean Technology Fund as Vladimir Putin continues to ravage Ukraine and hold leverage over western Europe’s reliance on Russian oil and natural gas. Although Europe is looking to wean itself off of Russian energy production, it will still take several years
  5. Biden’s plan would increase taxes paid on promissory notes. The administration’s proposal in the Treasury Department’s Greenbook limits the discount rate of the promissory note “to the greater of the actual rate of interest of the note, or the applicable minimum interest rate for the remaining term of the note on the date of death.” Increasing the tax burden on promissory notes could reduce investor interest in this effective stream of financing and refinancing for companies.