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Biden’s Empty Promise: “I will Only Tax the Richest”

The lawyer with a master’s degree in finance Martín Litwak, specialized in tax matters and estate planning, spoke with El American to analyze the economic proposal of the Biden-Harris formula

There would be no tax havens without tax hell, “is one of the phrases I have heard from the lawyer, with a master’s degree in finance, Martín Litwak. A great specialist in tax, tax and estate planning issues. The Argentine, who lives in the United States, spoke with The American to analyze the tax proposal of the Democratic Party candidate, Joe Biden 

Litwak has the plus to understand what a harmful tax proposal means to societies. Why? His native Argentina is a tributary hell. 

Historically, Latin America has been a region that has not protected capital or investors. Those people who, with great courage, entered the market to compete were constantly hit with a mallet. Unfortunately, a region without legal certainty, high tax burdens, and many statist ideas are not the best context for risking money. Because at the end the investor is that: a brave man who puts his resources at stake. 

Quite the contrary occurs in the United States, it has generally been characterized by maintaining extremely high legal certainty and having unequivocal respect for all freedoms, including economic ones. Not for nothing are the most prosperous nation on the planet. 

For this reason, the economic and tax proposal of the Democratic formula Joe Biden / Kamala Harris is worrying. Basically, because what they promote is near to the failed policies that have been implemented in Latin America. 

Emmanuel Alejandro Rondón: The Wall Street Journal took out an editorial, taking a study as a reference, which highlighted that American families will stop perceiving $ 6,500 in his average income from Biden’s economic policies. They called him the “Bidenomics”, why is that? 

Martín Litwak: Firstly, it is because the corporate tax – which Trump fell in 2017 from 35% to 21% – Biden is proposing to raise it from 21 to 28. He thinks that Trump, if reelected, is going to reduce it a little more, to 20. 

Second, you have personal earnings, the Democratic candidate wants to raise the highest Brackets, and the truth is that while people think that if the highest Brackets rises, the richest is being penalized, the reality is that the economy is a set of communicating vessels where it cannot be determined who will pay the tax. 

I put the tax and then movements are generated in the economy that makes it possible for the wealthy family that has to pay more money to put that price on their products or services that they sell and they will end up paying the one that cannot transfer. The tax is always paid by someone who cannot transfer you to another. 

Also, the rate of Gains capital and changes in the return inheritance tax are also expected. So, the reality is that it is going to be the, conversely, largest tax reform in the history of the United States. 

It is complicated, Biden’s tax policy is appalling. Objectively, the changes it intends to make in tax policy are very bad. And I think nobody thinks they are good, not even their voters. I think they will vote for him despite these changes and not because they are promoting them, because they really are very bad for the economy. 

Emmanuel Alejandro Rondón: the explanation is very clear. Now when Biden says, setting an example, “I’m not going to raise taxes on families who earn less than $ 400,000 a year, “is a false promise? Because, after all, you can’t control that. 

Martín Litwak: It would not be false because the bracket is going to be there, surely. There is going to be a raise. What happens is that, first, the corporate tax affects everyone, not just the richest; and the corporate tax is unique. I mean, Amazon pays the same tax as my law firm. The reality is that by raising the corporate tax from 21 to 28%, what you are generating is that many companies here go outside. Which is the complete opposite of what Trump accomplished when he lowered taxes. 

With which, if the companies leave, what do you generate here? Unemployment, higher costs, more poverty. Biden’s proposal will affect the entire economy, not just the richest families. 

Emmanuel Alejandro Rondón: beyond the crude numbers of taxes, what about another important part that is the meddling of the State in the economy. What does Biden propose? Will you increase regulations? Will bureaucracy grow? Will it be more difficult to open a company in American territory? 

Martín Litwak: Democrats have historically increased regulations and taxes; it is in the DNA of the Democratic Party. So, if they are going to promote the Green Deal, obviously that has to do with more bureaucracy. There are not many doubts about it and beware, they do not hide it either, they are not denying it. 

Biden can keep his promises? 

Emmanuel Alejandro Rondón: Democrats talk a lot, too, about the social justice discourse, which protects the poor, who want to fight inequality; that’s his rhetoric. Now, how do Biden’s policies affect the people they say they will protect? Or do their policies really serve to achieve what they promise? 

Martín Litwak: Look, for starters, the diagnosis is wrong because the problem is not inequality, but poverty. If we were all unequally wealthy there would be no problem. 

Emmanuel Alejandro Rondón: of course. 

Martín Litwak: so, the problem is not fighting wealth or inequality. What you have to fight is poverty, in short. That on the one hand. And, on the other hand, the Democrats within their proposals have the wealth tax, a tax that today does not exist in the United States as no successful developed country has. Does not have USA but neither does England, nor Germany. 

Emmanuel Alejandro Rondón: wealth tax sounds very third world, Argentina, for example. 

Martín Litwak: exactly, it is that precisely. In Latin America only Argentina, Uruguay, and Colombia have it; And the reality is that a wealth tax generates a disincentive to savings, a disincentive to investment, a disincentive to productivity, and a disincentive to growth. So, who ends up paying the wealth tax is the poor people. I always say: the current wealth tax is a future poverty tax. 

Emmanuel Alejandro Rondón: how you would ideologically rate the Democrats’tax proposals? Because when I go beyond economic plans or taxes, and I get to social, I notice that many of the plans of the Biden-Harris formula are subsidized state gifts. Obviously one thing is linked to the other. We cannot analyze an economic proposal without analyzing this part, and they seem very Latin American policies; Could these tax plans be classified as socialist or exaggerating? 

Martín Litwak: I believe that in the USA there was never a political party as socialist as the Democrat of today. So, yes, they definitely oscillate between social democracy and socialism. There are no pro-capitalist policies. Luckily in the USA, there is legal certainty, there are checks and balances and even if Democratic socialism winning the presidential elections, and that they also keep a majority in the legislative chambers, you still have the independent justice of the conservative majority.

Actually, the United States is based on a system of checks and balances that in fact if you look at yourself there are things that Trump wanted to do and could not, because some judge told him that he could not do them. 

So, the United States is not Argentina, it is not a country without legal certainty, it is a country that, even with a socialist president, will not go through several recurring situations in Latin America. For me, Biden’s triumph for the rest of the world and for the image he gives is more serious than for the United States itself. I think he will say: ok, we are going to have more taxes, that is going to be a problem, but I think that in four years if Biden -to win- and does what he says he is going to do, the next president in 4 years will certainly be a Republican. 

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