Dangerous “Progressive” Tax Plan 2021

Categories : Financial, News
September 22, 2021

Behind closed doors and protected from average Americans by a newly reconstructed fence around the Capitol Building, Joe Biden, Nancy Pelosi, and Bernie Sanders recently hammered out their Taxation Wish List. In true Washington style, the euphemism American Families Plan, or AFP, was bestowed upon their List. The plan is to implement AFP in a single-party Budget Reconciliation Bill that will be rejected by every elected Republican. I’m experiencing ObamaCare déjà vu.

“Progressives” claim to need vast new Government Revenues to cover their underestimated $3.5 Trillion spending boondoggle, while supposedly living up to Presidential Candidate Biden’s promise to not increase taxes on anyone earning under $400k annually. A simple look at reality, plus a reading of the proposal, suggests a miserable failure.

Taxes have already been raised on all Americans through government-imposed inflation. Largely based on restrictive Energy Policy, items such as gasoline and food have already risen sharply. This is essentially a regressive tax on Americans, as lower-income people spend a larger share of their income on necessities. So much for limiting new taxes to “the Rich.”

As to revenue projections, Congress uses a “Static Budgeting” process that does not reflect human behavior. We have already read stories from high earners, who will be working, producing, and earning less, should their marginal tax rates rise. Over time, actual Government Revenue collections will disintegrate.

For average Americans, most AFP provisions will not directly affect Income Tax Returns. Long-term, AFP will suppress economic viability nationwide, and we will all be hurt. Punishing success by taxing larger income taxpayers to an even higher degree has never worked, and never will.

Each of AFP’s provisions applies mostly to higher-income people, with no immediate effect on the rest of us. Long-term negative effects on the economy will impact every American. Producers will produce less, manufacturers will manufacture less, and service providers provide less service. The Administration is incorrectly claiming that AFP, which would cost a minimum of $3.5 Trillion, is totally paid for by taxing rich people and corporations. They are wrong.

Van Wie Financial is fee-only. For a reason.