(RightWing.org) – The Democrats’ big dreams of turning America into a semi-socialist hybrid country aren’t abating despite recent setbacks. They never stop. Pushing forward despite impossibilities isn’t a failure — it’s arriving at success over time. Consider how much our politics and government have changed over the last 20 years as the Left began to change society through culture wars, as well as transformational government intervention in both business and our lives through Obamacare alone. Today’s impossibility is tomorrow’s future, and the Left is banking on it.
While not a new proposal, the Democrats are closer than ever to passing a tax on billionaires that could destroy businesses, the economy, and significantly harm the middle class. Many of you might be saying, “oh those poor billionaires.” Fair enough. However, they start a lot of businesses with their money, and those new companies provide jobs, many of which are well paying.
How Could a Tax Hurt the Little Guy If It’s Aimed at the Big Guy?
In case you forgot in the midst of the spending spree going on in Washington, DC, the federal government is spending a lot of money. It’s so much money that a trillion one-dollar bills would stack from the ground to the sun. A plane flying at the speed of sound would take 14.4 years to cover the distance. In 2020 and early 2021, Congress authorized $5 trillion in spending.
Until moderate Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) intervened, the two-track infrastructure deal was over $5 trillion more. Who knows where the negotiations with Democrats will go in the days ahead, but another trillion in spending is a lot of money.
So, how is the government going to pay for all of this spending? It already holds nearly $30 trillion debt. Keep that in mind. There are 614 billionaires in the United States worth a total of $2.95 trillion. If you liquidated all their assets, it still wouldn’t pay for socialist Sen. Bernie Sanders (I-VT) dreams of spending $6 trillion.
Let’s complicate this just a bit more. Under the current tax code, the government taxes billionaires on their earned income. That includes salaries, but the largest portion of their wealth comes in investments. The IRS taxes investments when they’re turned into cash. For example, if you sell a stock or property, the increased value of the asset over its initial purchase is earned income, and that’s taxable. A business is an investment to its owner(s).
What Senate Finance Committee Chairman Ron Wyden (D-OR) is proposing is a tax on unrealized income. So, if investments rise in value, they are taxed on the value of its increase, not on whether or not investors sold the asset.
How does this affect you? After all, you’re not filthy rich.
Let’s suppose an entrepreneur invests $100,000 of their money in the shares of a public company they founded. What if the business is flourishing and the business takes off. Suddenly, it’s worth $1.1 billion. Technically, the entrepreneur is a billionaire by Wyden’s standard, but accounting for the cost of running the business, he isn’t even close to owning that much money. Now, a massive tax is due. To pay it, the entrepreneur must liquidate his company to pay the IRS. In turn, the selling of the stock shares drives down its value. So, not only did the entrepreneur pay Uncle Sam, but he also experienced a sort of double tax due to the loss of value in the company.
That will hit everything below it, including jobs.
This is only one of several scenarios. Billionaires will find a way to keep their money, even if that means using dollar common sense. As illustrated, many entrepreneurs will pay the price for investing in companies that hire people to do incredible things. This proposal will hurt the economy and middle-class individuals at a practical level.
Business can be unpredictable. Companies need predictability to thrive. If the pandemic taught business owners anything, it’s that the government only sees them as dollar signs, not a partner in the larger economy.
Once again, Democrats either don’t understand basic economic principles or believe in the US market system. It’s likely the latter. The truth is they think the government can run the economy. When the government can dictate business success, control the flow of goods, and determine winners and losers, that is socialism.
So, don’t believe your lying eyes when a Democrat tells you they are a capitalist, but their actions mark them as a socialist. They can’t be both at one time.
Don Purdum, Independent Political Analyst
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