It is said that “nothing is assured but death and taxes.” Most people believe that the person that should pay the most taxes is anyone but me. So it’s not a great surprise that many people believe that we should increase taxes on the rich and corporations. But does this really increase revenue? For myself, if they raised taxes on overpaid movie stars and professional athletes who take a knee for the National Anthem, to 90% it would not bother me a bit. But does raising taxes really increase revenue?
We have learned a lot during this COVID-19 virus. Corporations and employees have also learned a lot. Corporations now know that they don’t need to have employees work from inside an office and employees know they don’t need to spend long commutes to go to work, they just work from home on a laptop. Home is where we live. So taxpayers want to live where they keep what they earn. People are moving from high-taxed states, such as California and New York, where taxes are as high as 13%. Add the cost of living, riots and homeless problems it makes relocating a good idea and saves thousands of dollars.
Corporations worldwide realize that high tax rates hurt their bottom line. They are moving to countries such as Ireland with a stable 12.5% corporate rate. The current corporate rate in the U.S. is 21%-23%. If corporations move they could pay no tax to the U.S. Biden wants to raise the rate to 28%. Sure doesn’t sound like that would raise revenue.
There is one more hidden tax on individual taxpayers. When corporation taxes and capital gains rates are raised the value of corporate stocks go down, or they stop or reduce dividend payments. Most Americans have a retirement plan that is invested in stocks in these plans. That’s the hidden tax.
David M. Peterson