Joe Biden fashions himself a champion of the middle class, but his long record as a tax-hiking liberal does not match his supposed everyman persona. Now that Biden has entered the crowded 2020 field, it is worth reviewing his penchant for higher taxes.
In a 2008 vice presidential debate, Biden made a firm promise to the middle class that he would not raise “one single penny” of any tax on any American making less than $250,000 per year. “No one making less than $250,000 under Barack Obama’s plan will see one single penny of their tax raised whether it’s their capital gains tax, their income tax, investment tax, any tax,” Biden said.
This pledge turned out to be a flagrant lie. Immediately after winning the 2008 election, Biden turned his back on the American people and set out to raise taxes on millions of households.
Obamacare, the Obama-Biden duo’s signature legislative achievement, imposed a trillion dollars in new or higher taxes that directly targeted the middle class.
Obamacare’s most infamous tax was the highly regressive individual mandate tax. Obamacare imposed a tax penalty of $695 on individuals and a tax penalty of $2,085 on families unable to purchase healthcare. A majority (76.86%) of households stuck paying the tax made less than $50,000, while 33.63% of affected households made less than $25,000. The individual mandate was a blatant violation of Biden’s middle-class tax pledge.
Obamacare imposed a medicine cabinet tax on health savings accounts and flex spending accounts, restricting Americans from using these funds to buy over-the-counter medication. This affected the 55 million Americans covered by a health savings account or a flex spending account. Obamacare also implemented a $2,500 cap on flex spending contributions, negatively affecting the 30-35 million Americans who use these pre-tax accounts to pay for basic medical needs. Before Obamacare, families could contribute unlimited money to flex spending accounts.
Obamacare also raised taxes on Americans faced with high medical and dental expenses in a given year. Before Obamacare, taxpayers could deduct the cost of high medical and dental bills to the extent the costs exceeded 7.5% of adjusted gross income. Under Obamacare, taxpayers could only deduct costs in excess of 10% of adjusted gross income. This change hit an estimated 10 million households, with average annual income of $53,000, raising their income tax burden by an average of $200 to $400.
Biden was also a fierce opponent of tax cuts during his decades-long career in the Senate. Biden consistently voted against repealing the death tax. The death tax has a devastating impact on family farms and small businesses all across the country, and studies have shown that the insidious tax hampers economic growth. Nobody should have to deal with the undertaker at the same time that they deal with the tax man.
Biden also voted against repeal of the Alternative Minimum Tax, a relic that was originally designed by Ted Kennedy and Richard Nixon in 1969 to hit 155 millionaires who paid little in federal income tax (due to their purchase of municipal bonds). In the decades that followed, the Alternative Minimum Tax ballooned to hit tens of millions of Americans.
The GOP’s Tax Cuts and Jobs Act zeroed out the individual mandate tax, giving instant tax relief to millions of low- and middle-income Americans. The Tax Cuts and Jobs Act restored the medical expense deduction to 7.5% for 2018 and 2019, and Republicans are trying to make it permanent. The act also doubled the death tax thresholds, saving countless family farms and small businesses from a massive tax burden. And the act effectively repealed the Alternative Minimum Tax, sparing middle-class families from additional tax complexity.
The economy is working again for American workers because of the Tax Cuts and Jobs Act. According to the Bureau of Labor Statistics, more than 2.6 million jobs were created in 2018, and nearly 5.5 million have been created since President Trump took office. Job openings sit at 7.6 million, a record high. The unemployment rate is a near-record low of 3.8%, and the number of people claiming unemployment benefits is at a 50-year low. Nominal wages have grown by 3.4% over the last year, a 10-year high.
The American middle class already suffered through eight years of high unemployment, wage stagnation, and anemic economic growth under the Obama-Biden regime. Biden will no doubt make another pledge that he won’t raise any tax on middle-income households, but we know how that turned out the first time. Biden cannot be trusted on the tax question.
Tom Hebert is a tax policy fellow at Americans for Tax Reform.
