Biden’s Bad Math Will Add Up to More Tax Money From Us
The Democrats claim their $3.5 trillion bill will be paid for by taxes on the rich. Here’s why that’ll never happen
I’m no math genius, but one thing I’m sure of: If the price tag of something is, oh, say, 3.5 trillion dollars, there’s no way that it will actually cost zero dollars.
But that’s what President Biden, Nancy Pelosi and their comrades are trying to make us believe about the Democrats’ proposed $3.5 trillion infrastructure package, where infrastructure apparently covers everything from bridges to diapers.
Here’s how Biden’s arithmetic works: Tax hikes on the filthy rich and big evil corporations will cover all of the $3.5 trillion, ergo, zero cost.
Now, just on the face of it that makes no sense. If you have a procedure at the hospital that costs $10,000 and insurance covers 100 percent of it, it may not cost you anything but the price is still $10,000. Just because someone else pays for something doesn’t mean the cost magically disappears. It’s just shifted elsewhere.
Billionaires and Their Fair Share
So what Biden wants to do is make trillionaires – yes, he said trillionaires – and billionaires pay their fair share. Of course, there are no trillionaires – according to Forbes, as of April America’s wealthiest person is Amazon founder Jeff Bezos, with a net worth of $177 billion (this figure fluctuates quite a bit with the stock market, because unlike Scrooge McDuck billionaires do not have giant storehouses of gold coins to swim in; they invest in stocks).
According to Bloomberg, the United States is home to 657 billionaires with a combined wealth of around $13 trillion. Biden’s plan is to raise their income tax rate to 40 percent. Forty percent of their combined wealth is $5.2 trillion, which more than pays for the plan.
Except that’s not how income taxes work. They don’t tax the total wealth, only the income they earn each year. And while some of the top richest people may make billions in a year, most don’t.
Many inherited that wealth or received it in a one-time sale of a business. Most of them make millions per year and some possibly even less. But say those 657 billionaires earned an average of $1 billion per year. The 40 percent tax would result in $262 billion annually.
The $3.5 trillion infrastructure package would be prorated over 10 years, so $350 billion per year. That means just taxing the billionaires more would fall short, especially when you consider that at least a portion of their taxes is needed to fund other parts of the government.
But of course one reason billionaires have billions is because they can hire expensive CPAs to find every last loophole so they can drastically reduce their net income. They aren’t doing anything shady – these loopholes were put there by our government.
Prepare for Hidden Taxes
What about the big corporations? Their tax rate will be 26.5 percent, a hike of 5.5 percent. Like with the billionaires, there are scads of ways businesses reduce the total tax amount, again thanks to the government.
And if the corporations do pay more, guess how they’re going to make up for it? Yep, by raising prices on the things you buy. One Democrat was aghast at the idea that businesses would raise their prices if their taxes increased. Obviously, this was someone who has never run a business and probably never was employed in one.
We already pay quite a bit in hidden taxes, or at least in areas where we don’t pay attention. For example, for each gallon of gas you buy, 18.4 cents goes to the federal government. And then there is state tax which varies quite a bit, from 13.77 cents in Alaska to 62.47 cents in California. So in California, the combined tax on a gallon of gas is nearly 81 cents.
There are other ways the government hides taxes. Years ago, the governor of Indiana bragged that he hadn’t raised taxes. But to do that he quit funding a number of mandated costs for schools. That meant the schools had to raise their rates on property taxes to make up for the shortfall. So while it was true that state taxes didn’t rise, the actual amount of taxes residents paid increased.
And sure enough, this bill includes a potential hidden tax: A tax on drivers for each mile they drive. That’s not just for truck drivers or salespeople; it will include everyone in the country who gets behind the wheel. Those trips to the grocery store or driving your kids to soccer practice could get pretty pricey.
So, yes, the federal government is really good at taxing us without our knowledge.
Where the Money Really Will Come From
All of this talk about taxing the rich isn’t going to happen, of course. Take a gander at the list of the top 20 wealthiest Americans and you’ll recognize quite a few big donors to Democrats, or who own businesses that donate to Democrats.
Do you think the Democrats will really enact a law that hurts their major donors and possibly reduces the amount of their campaign contributions? Not a chance. There will be many ways for the rich to escape paying what Biden calls their “fair share.”
So where will the money really come from to pay for this $3.5 trillion boondoggle? From where it always comes from, from your pockets and mine. It always filters down in some form because we don’t have big chunks of money to influence the right politicians, nor the inclination to do so if we had it.
Fortunately, right now the Democrats don’t have enough votes in the Senate to pass this bill because of two holdouts on the Democrat side. Let’s hope they don’t give in or we’ll be the ones making up the “zero cost” in Biden’s twisted math.