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Taxes and Income

Budget of the US Govt
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Kerby Andersonnever miss viewpoints

A week ago, President Biden rolled out his budget plan. Normally, I wouldn’t talk about it since it has no chance of passage. A similar plan he submitted in the past when Democrats controlled both the House and Senate didn’t pass. There is no chance it will be approved now that Republicans control the House of Representatives.

But I want to use his budget proposal to illustrate some important lessons about taxes and income. Just look at the number of taxes his plan proposes to shore up Medicare. We have been told by this administration that Medicare is doing fine and that there is no looming insolvency. In fact, the president has been pushing what he calls Medicare for All.

His plan would increase the Affordable Care Act surtax on investment income, along with increasing other taxes, and increase the top federal tax rate and the top rate on wages. These staggering tax rate hikes show that Medicare for All is a fiscal fantasy. If Biden’s proposed tax increases are necessary to shore up Medicare, which is mostly for people over 65, imagine how much higher tax increases would be necessary for Americans under the age of 65.

His budget plan also would raise taxes on income as well as “appreciated assets.” But appreciated assets are not income. Since the federal government always wants more tax revenue, it has been willing to define nearly everything as income. But an appreciated asset is not income. If you own a house or stock whose value rises, you don’t have more income. You would have income if you sold it. But you don’t have more income if you did not sell it.

We should not be surprised that the president’s solution to paying for all this government spending is to increase taxes and to declare any asset as income that should be taxed.viewpoints new web version

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