(California Globe) - ‘Many families will literally have to sell the farm to pay the Biden taxes’.
“In this world, nothing is certain except death and taxes,” Ben Franklin said in 1789. And that was before America adopted an “estate tax,” commonly known as the “death tax.”
“In the United States, the tradition of taxing assets at death began with the Stamp Act of 1797,” the Heritage Foundation explained, with the first Stamp Act on tea which helped precipitate the Revolutionary War.
A new economic impact analysis of the Biden death tax and capital gains tax increases finds significant and long lasting negative effects on California family-owned businesses, farms, and ranches within the state.
The study, published by the Committee to Unleash Prosperity, an organization “dedicated to educating the public on the pillars of supply-side economics,” based on an economic analysis by forecasters at Regional Economic Models, Inc. (REMI), a non-partisan economic modeling firm, examined the impact of the Biden tax plan on jobs, investment and state economic output for the nation and in 13 states including California.
REMI found the following key results for California over the 10-year period of 2021 – 2030:
- Sustained annual job losses ranging from 100,000 to almost 125,000, which translates to 1,000,000 to almost 1,250,000 fewer job-year equivalents over 10 years;
- 10-year losses in economic output and GDP of about $285 billion and almost $170 billion, respectively, with $75 billion loss in private investment, and a $1.7 billion loss in R&D spending;
- 10-year loss in personal income of over $180 billion, or about $11,000 – $13,000 per household.
“This study shows that the Biden death tax scheme is an assault on the American tradition of family-owned and operated businesses being passed on from one generation to the next,” said CTUP’s co-founder Stephen Moore. “Given the widespread opposition from small businesses and farmers, some members of Congress are claiming they’ll fight for exemptions, caps or whatever excuse they can come up with to claim they’ll protect family enterprises. However, there is no actual legislation to do so and it’s just political jargon to try and save their seats. Exemptions and carve outs don’t work. Many families will literally have to sell the farm to pay the Biden taxes. The damage to jobs and the economy would be multiple times larger than any revenue gained for the government from this unfair tax proposal.”
The “death tax” is double taxation, which occurs when taxes are paid twice on the same dollar of income, regardless of whether that’s corporate or individual income, according to the Tax Foundation. The estate tax creates a double tax on an individual’s income and the transfer of that income to heirs upon death.
The Tax Foundation has analyzed the Biden administration proposal and explains the impact:
The Biden administration’s proposed American Jobs Plan (AJP), American Families Plan (AFP), and fiscal year 2022 budget would increase federal spending by about $4 trillion over 10 years, including $1.7 trillion for infrastructure, partially funded with higher taxes on individuals and businesses as well as increased tax enforcement.
Using the Tax Foundation General Equilibrium Model, we estimate the tax proposals impacting individuals and businesses would increase federal revenue by about $1.3 trillion conventionally over 10 years. In addition, the administration claims about $700 billion in additional revenue from tax enforcement. We estimate the combination of revenue and spending proposals contained in the president’s budget would reduce U.S. gross domestic product (GDP) in the long run by 0.9 percent and result in 165,000 fewer U.S. jobs.
According to the Tax Foundation, the Biden administration proposes:
- to raise the top marginal income tax rate from 37 percent to 39.6 percent;
- Tax long-term capital gains as ordinary income for taxpayers with adjusted gross income above $1 million, resulting in a top marginal rate of 43.4 percent when including the new top marginal rate of 39.6 percent and the 3.8 percent Net Investment Income Tax (NIIT);
- Tax unrealized capital gains at death for unrealized gains above $1 million ($2 million for joint filers, plus current law capital gains exclusion of $250,000/$500,000 for primary residences), among other increases.
Regional Economic Models, Inc. reports, “We found that the proposed changes would generate almost 125,000 sustained job losses, or about 1,250,000 job-year equivalents over 10 years. They would also induce 10-year losses to economic output and GDP of about $285 billion and $170 billion respectively, as well as $75 billion and $1.7 billion respectively in private investment and R&D spending declines. Finally, the 10-year loss in personal income could also exceed $180 billion, translating into up to $13,000 in foregone income per household.”
Both REMI and the Tax Foundation agree on the significant loss of economic output, personal costs to Americans including losses of personal income, as well as job losses.
Famed American actor and humorist Will Rogers was onto something when he said, “The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”
By Katy Grimes, September 15, 2021
