President Biden delivered his fiscal year 2023 budget 49 days late–almost a record. Given the mix of tax hikes, inflation-fueling spending, and radical agenda items, it would have been best left undelivered at all. 

At a time when Americans expect Washington to behave with restraint, the administration has put forward a spending plan with policy priorities that are out of step with the country.

Our households will pay the price today, tomorrow, and for generations to come. 

Resurrecting the inflationary Build Back Broke bill

The President’s budget has an unspecified budget-neutral placeholder for the Build Back Better (BBB) agenda. This is his climate change and social spending bill on liberal wishlist items from universal pre-K to Green New Deal giveaways.

BBB was not just reckless and inflationary spending, but it created new entitlements programs that would undermine the childcare and early-education landscape in America in ways that remove control and choices for families.

BBB is too radical and too pricey for moderate left-leaning lawmakers. Its current status is dead. President Biden still cannot muster 50 votes from his own party to get it passed the U.S. Senate. So, the president is using this budget as a vehicle to resurrect his multitrillion bill, which would undoubtedly fuel inflation the way his American Rescue Plan did.

Tons and TONS and TONS of tax increases

The Biden administration proposes $2.5 trillion in new taxes over the next decade. According to Americans for Tax Reform, this budget includes 36 tax increases on individuals and businesses. 

Corporate tax hikes that will hurt regular Americans

One of the most concerning tax increases is another shot at raising the corporate tax rate back up–after it was lowered in 2018–to 28 percent. That level would be even higher than China’s corporate tax rate and the highest corporate tax rate among the 38 Organization for Economic Cooperation and Development (OECD) nations. U.S. businesses–including women-owned businesses–would be less competitive than their foreign rivals. 

Raising the corporate tax rate has negative consequences for families and workers. Nearly a third (31%) of a corporate tax increase is passed onto consumers in the form of higher prices according to a 2020 National Bureau of Economic Research paper. With inflation running high at 7.9% in February and even higher for different food items, services, and fuel, American households cannot afford another jolt to prices.

In addition, corporate tax increases lead to lower wages and fewer job opportunities for workers. Labor bears 70-100% of the burden of corporate income tax. Inflation is already eroding workers’ wages and purchasing power causing real wages to fall by 2.6%. President Biden shouldn’t be advocating for an even greater pay cut for workers or the loss of jobs.

New asset tax for upper-income households

The White House has also proposed a new tax on very wealthy households called a “billionaire minimum income tax.” In reality, it wouldn’t just be limited to billionaires but to Americans with $100 million or more in assets. Copying wealth tax proposals from Senators Bernie Sanders and Elizabeth Warren, the new tax would be a fundamental change to how assets–homes, real estate jewelry, coin collections, stocks, and bonds held as investments–are taxed by the IRS and not for taxpayers’ benefit.

Capital gains are the increase in a capital asset’s value realized when the asset is sold. Currently, asset holders only pay a capital gains tax when an asset is sold. This is logical since we don’t know the value until the asset is sold and that’s especially true for investments, which have values that fluctuate on a  daily basis due to the markets. 

Biden’s proposed plan would require asset holders to pay tax on the value of an asset on a particular arbitrary date. 

The Wall Street Journal explains why this is bad news:

Here’s the Biden trick: The 20% minimum tax rate would apply both to ordinary income and the increase in the value of assets in a given year. This means taxing unrealized capital gains, which currently aren’t taxed until assets are sold and income is actually realized. In other words, this is a new tax on wealth—even if it’s structured differently than what Elizabeth Warren and Bernie Sanders have proposed. The White House is redefining wealth as income.

The president would need an army of IRS tax professionals to track and tax all of these transactions which Americans would be required to report annually. Imagine the reporting nightmare and how it would complicate our tax code.

Those who think this is a billionaire’s problem shouldn’t tune out. Over time, this new tax could expand further down the income scale to capture more American families. 

An out-of-control spending spree 

President Biden’s budget asks for $72.7 trillion in spending over the next decade and no way to pay for it. Unlike regular households which have been paying off their debts and spending within their budgets, U.S. debt would rise to a record $44.8 trillion over the next ten years from $30.2 trillion today.

As Heritage Foundation analysts explain, “That’s like an average family that is already $234,000 in debt spending between $9,300 and $14,000 more than it makes each year, with its total debt reaching $347,000 in just 10 years.”

The budget depends on gimmicks and outdated economic assumptions to make the numbers seem fiscally responsible. However, budget experts have poked holes in the budget and found that it will neither bring down inflation, get deficits under control nor tackle the debt. It would do the exact opposite. The Committee for a Responsible Federal Budget concluded:  

Under the budget’s own estimates, debt would rise to a new record as a share of the economy. Meanwhile, the budget would do next to nothing to address the looming insolvency of the Social Security, Medicare, and Highway Trust Funds. Nor does it include measures outside of Build Back Better to slow health care cost growth, which is a key driver of rising long-term debt.

Failure to make our entitlement programs sustainable and put the debt on a clear downward path over the long run will ultimately slow economic growth, increase the cost of living, reduce the nation’s flexibility to address future needs, leave benefit levels of important support programs in jeopardy, increase the ultimate risk of a fiscal crisis, and leave us more vulnerable to future economic and geopolitical emergencies.

President Biden’s FY 2023 budget is an out-of-control, inflationary spending spree, and tax bonanza. Congress should return it to the sender.