House Speaker Nancy Pelosi (D., Calif.) holds her weekly news conference at the U.S. Capitol in Washington, D.C., September 8, 2021. (Jonathan Ernst/Reuters)
House Democrats have put forward a worst-of-both-worlds tax proposal: punishing enough to do real damage to the U.S. economy and individual households, but not nearly enough to pay for the trillions upon trillions of dollars of new spending Joe Biden and his congressional allies have put into play.
In theory, the point of tax bills is to raise revenue to support necessary government spending. The spending has for a very long time now been far in excess of what is necessary, while our tax system, complex and burdensome though it is, fails to produce enough revenue to avoid permanent budget deficits. But revenue here seems to be an afterthought.
Democrats propose to raise personal income taxes (to 39.6 percent plus a new 3 percent surcharge on incomes more than $5 million), corporate taxes (to 26.5 percent), and taxes on investment income (to 25 percent); impose higher taxes on “pass-through” income from business partnerships; and hike estate taxes. All told, the Joint Committee on Taxation estimates that the tax increases would add up