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The big news is that Joe Biden is planning to propose a series of tax increases that will theoretically generate up to $1.8 trillion to pay for all his spending plans. I say “theoretically” because the proposed taxes will hit our weak economy so hard there won’t be enough money to fulfill this Biden dream. But what many people don’t realize is that we’re already having a stealth tax burden imposed on us, especially on retired people and those on fixed incomes, by virtue of the government’s money-printing binge.
According to Axios, this is the general plan:
The biggest-ticket item would raise the corporate rate from 21% to 28%. That’s worth $730 billion over 10 years, according to the Tax Policy Center.
The other three would:
- Impose a global minimum tax on profits from foreign subsidiaries: $550 billion.
- Tax capital gains as regular income for the wealthy and tax unrealized capital gains at death: $370 billion.
- Return the top individual rate for those making more than $400,000 to the pre-Trump rate of 39.6%: $110 billion.
Regarding that last point, assume it’s a lie. The White House has already admitted that the individual rate will hit people earning $200,000, not $400,000. That’s a lot of middle-class people, especially in Biden’s own blue parts of America, where $200,000 doesn’t go far.
There’s something much more pernicious going on here, though, because Americans are already being taxed; they just don’t know it because Congress hasn’t passed a tax bill. The problem is that the Democrats and the Federal Reserve’s policies are driving inflation. For example, by giving $1,400 to every American, rather than having a means-tested approach to handing out money, the government just raised the overall cost of living by $1,400.
That’s because there is no actual $1,400 for everybody. The government is already deeply in debt. The only way it can hand out checks to everyone is literally to print money – that is, to put more money into the system. The government has been doing that for a long time.
For the government, indebted as it is, inflation is a good deal. For people living off their retirement or on fixed incomes that aren’t indexed to inflation, it’s a disaster. I know this because, during the last major inflationary cycle in the 1970s, my grandmother went from being a very rich woman to a woman who managed to die just before her money ran out.
For you young people, new to the idea of massive inflation, here’s a very simplified explanation about how it works: Imagine a small town that always has only 100 items to sell, each always priced at $1.00 or 1/100 of the money in circulation. The citizens are all retired and live off their savings.
Unfortunately, the town mayor incurs $100 in municipal debt. How’s he going to deal with it? Well, in our case, he goes to the printer, and says, “Print another $1,000. I’ll use $100 of it to pay the debt and the town will benefit by having $1,000 in total circulation.”
The problem is that the town’s wealth hasn’t changed. It still has the same number of items for sale. Now, though, when they’re priced at 1/100 of the total money in circulation ($1,000), each item is priced at $10, not $1. The money has been devalued.
That town has just seen inflation in action. For the mayor, it was a great way to get rid of the debt — although the creditor, getting paid in devalued money, was harmed because he loaned $100 and basically got $10 in return.
That devaluation is also a problem for all those people living off their retirements. Suddenly, the money in their bank accounts is worth 90% less than it was before. The person who had saved $100 and could therefore buy 100 items now can buy only 10. The mayor impoverished him overnight.
Currently, the government is printing money like crazy to provide cash to pay for all the mad spending we’ve seen in the past year. The Biden tax plan is only for future spending. Past debts are being paid down by devaluing the dollar, something that destroys people living off their retirements or being paid fixed amounts that are not adjusted for inflation. That’s taxation without representation and we’re already paying it.