By Brad Polumbo
President Biden ran for office promising not to raise taxes on anyone earning less than $400,000. But a new analysis provides yet more proof that the president’s actual tax plans belie his rosy rhetoric.
According to the Tax Policy Center, more than 60 percent of Americans would see their taxes increase under Biden’s proposals. The average increase would come out to $2,930 per year.
It is true that wealthy Americans would bear much of the tax increase. However, the middle class doesn’t escape the burden: 75 percent of households earning $75,000 to $100,000 would see a tax increase, in the amount of roughly $440 annually. Similarly, nearly 70 percent of those families earning $100,000 to $200,000 would see tax hikes. The increases would average about $830 per year.
Clearly, these figures debunk Biden’s promise not to increase middle-class taxes. However, there’s more here than just a politician caught in a campaign fib. (That’s not exactly earth-shattering news). There’s an important lesson here on the difference between the nominal assignment of taxes and who really bears the costs.
“It is the operation of the market,” wrote Austrian economist Ludwig von Mises, “and not the government collecting the taxes, that decides upon whom the incidence of the taxes falls and how they affect production and consumption.”
“Who pays the tax?” economist Murray Rothbard asked. “It would seem that the answer is clear-cut, since the government knows on whom it levies a tax. The problem, however, is not who pays the tax immediately, but who pays it in the long run.”
In other words, nominally assigning a tax to someone doesn’t mean they ultimately pick up the tab.
President Biden’s plans do say they won’t increase taxes on those earning less than $400,000. However, many of the increases included such as corporate tax increases are in reality mostly borne by workers because they lead to decreased investment, lower productivity, and thus lower wages.
So don’t fall for the president’s spin. Biden can insist until his face turns blue that he won’t raise middle-class taxes, but the reality that his tax hikes will hit everyday Americans remains unchanged.