President Joe Biden has proposed trillions of dollars of new tax increases. He has pledged repeatedly that his tax increases will not touch anyone earning less than $400,000. These tax increases, he has promised, will only hit the very wealthy and the largest corporations.
But the president is breaking his pledge. He either does not realize or is ignoring the impact his corporate tax increases will have on millions of middle-class people earning far less than $400,000. Study after study shows that the Biden tax increases will hit millions of working people, consumers, and savers.
Tax experts all agree that corporations do not pay taxes. People pay corporate taxes. Biden has proposed more than $2 trillion in new taxes on U.S. businesses. Under his budget, corporate taxes will more than triple over the next 10 years. But corporations will not, ultimately, be paying these new taxes. Working people, consumers, savers, and investors will be paying the new taxes for years to come.
Studies show that a portion of a corporate tax increase falls on workers in the form of lower wages. The Tax Policy Center found that “most households would pay more taxes in 2022” and that “about three-quarters of middle-income taxpayers would face a tax increase” due to the Biden corporate tax increase.
A Federal Reserve Board study found that a corporate tax rate increase would lead to “significant reductions” in workers’ incomes. Based on their estimates, the Biden corporate tax rate increase could cost a household earning $80,000 as much as $3,360 a year in lower wages. A 25% tax rate would cost this family nearly $2,000 a year.
Studies also show that corporate tax increases will increase consumer retail prices. A National Bureau of Economic Research paper found “significant effects of corporate taxes on prices” and that approximately 31% of corporate taxes fall on consumers.
Corporate tax hikes will also raise energy bills for households. Higher tax rates on utility companies will be passed on to consumers in the form of higher utility bills every month. Finally, corporate tax increases will have a negative impact on the stock market and the retirement savings of millions. More than 100 million people have 401(k)s, over 60 million people have IRAs, including millions of retirees, and millions more have pension plans. All of these people could see their retirement savings decline due to the corporate tax increases.
The claim that no one who makes under $400,000 will be hit by the Biden tax increases is simply not correct. Under the Biden tax increases, millions earning much less will face lower wages and income, higher prices on basic household goods and services, and lower retirement savings in their 401(k)s and pension plans.
The economy is starting to slow, and job growth is slowing. Wages are falling, and inflation is increasing. It makes no sense to raise corporate taxes in this fragile economy. These tax increases should be rejected.
Bruce Thompson is a former U.S. Senate aide, was assistant secretary of the treasury for legislative affairs during the Reagan administration, and was director of government relations for Merrill Lynch for 22 years.
