Three Reasons Why the Biden Tax Increase Makes No Sense
Anyone who believes the “rich” and large corporations will pay for $28 trillion in debt or the $2 trillion in new deficit has a real problem with math.
Biden’s announcement of a massive tax increase on businesses and wealthier segments of the population simply makes no sense. The tax hikes will have a significant impact on economic growth, investment, and job creation and do not even scratch the surface of the structural deficit. Even if we believe the gross domestic product growth and revenue estimates announced by the Biden administration, the impact on debt and deficit is negligible. So, what is their response? That debt and deficits do not matter because the key now is to spur growth and the cost of borrowing is low despite rising debt.
Furthermore, the Biden administration has been inundated by MMT (modern monetary theory) proponents who passionately believe that deficits are good because they attend to the rising global demand for US dollars. Additionally, the Biden administration argues that the deficit increase is not a problem because the Federal Reserve continues to purchase government bonds, keeping yields low and debt costs stable.
Nice, so why the tax hikes, then? If debt and deficits do not matter and growth and jobs is what we need to focus on, then why increase taxes?
The entire tax increase argument crumbles. There is absolutely no rationale for such massive hikes either from the revenue perspective or the growth objective. If growth will take care of the rising deficit, the Biden administration should use all the tools to support growth.
There are three main reasons why the tax increase makes no sense.
Article from Mises Wire