Most of us agree that tax law should be fair and equitable and that government spending should stay within fiscal means. But when the spending wish list grows, the reflexive response is to find someone or something to tax.
The Biden administration’s $3.5 trillion domestic spending package is a prime example of taxes chasing spending. The plan is too expensive, and they know it, and the proof rests in the many ways the Democrats want to pay for it.
A tax plan from House Democrats proposes to raise $2.9 trillion to pay for the spending, in part by hiking the corporate tax rate from the Trump-era 21% to 26.5% for big businesses and slapping a surcharge on individuals who make more than $5 million.
The top tax rate for capital gains also would climb to 25%, up from 20%, and the top marginal income tax rate would increase to 39.6% from 37% for households with taxable income over $450,000 and for unmarried individuals with taxable income greater than $400,000.
Surely that pays for the president’s spending, right? No, it doesn’t. Revenue from these measures doesn’t pay for the entire $3.5 trillion package.