Uncle Scam! Between Colorado State Laws & Biden's Tax Agenda, The Middle Class Are Going To Get A Lot More F**ked
Prepare yourself because the reality of the situation is a bitch ...
Good and evil.
Both are highly subjective terms that everyone seems to have a strict definition of when it comes to each. And the arrogance birthed from this perception is in fact what almost entirely drives modern-day politics.
For example, to a die-hard Democrat, the standard economic policy of the Republican party—cutting taxes on top earners while the lower- and middle classes are crushed due to them being forced to pick up the slack—is the epitome of evil. For this brand of liberal, the failed tax policies of the Reagan, Bush Jr., and Trump administrations have caused massive wealth discrepancies in our social classes. Phrases like "the rich get richer while the poor get fucked" have become a calling card of sorts for these Democrats. However, it must be said that though they aren't inaccurate, they are missing half the story.
For reasons that will become clear a little later in this article, you cannot have the levels of income inequality that we currently enjoy(?) without some help. And sadly, it appears that Democratic leadership (ranging from those who are elected locally all the way to the president) have taken up the challenge and subversively thrown their hat into the ring by offering tax plans that are geared to help line the pockets of the financial elite, all while espousing the need to "help the little guy." Not only is this platform utterly hypocritical, but it's also just plain icky.
What makes this situation incredibly irksome is the fact that some of the most egregious examples of this double-talk come from our own backyard. Enter TABOR ...
The Taxpayer’s Bill of Rights (TABOR) is a 1992 constitutional amendment approved by Colorado voters that caps governmental growth each year to population increases and the rate of inflation. Any money collected over the cap has to be refunded, but the legislature has broad discretion over how the refunds are issued. This act is the reason most Coloradoans received either a $750 or $1,500 check last year. Also because of TABOR, in conjunction with an additional surplus, the state is expected to return another $2.7 billion to taxpayers.
On the surface, it seems like a great idea. I know that receiving either one of those checks could help me out immensely at almost any point of the year, plus, the entire program reeks of wealth re-distribution—which is something I don’t oppose per se. But at the end of this road paved with good intentions, we are met with the inevitable Hell.
A report done by Bell Policy found that Colorado's six-tiered TABOR rebate system only helps the wealthy. In it, they found that the top 1%—approximately those making above $500,000 annually—get 24% of the refund distribution while those making above $246,000—the top 7% of taxpayers—will get more than 15% of the sales tax refunds. And given that TABOR rebates in the next three fiscal years are projected to total over $4 billion, the gains for those at the top of the income spectrum will dwarf everyone else’s.
When you dig a little deeper, you find where this discrepancy comes from.
A 2021 study published in the annual Tax Profile & Expenditure Report by the Colorado Department of Revenue shows that overall, Colorado’s tax system is regressive, thereby hurting the poor. The document found that the overall tax burden disproportionally hurts the poor not because of the income tax, which is progressive, but because every other state and local tax is regressive. The other taxes place a massively unbalanced burden on lower earners. For example, those making under $15,000 per year pay 21% of their income in state and local taxes while those making over $200,000 pay only 7%, on average.
Even state legislators know this system is unfair. When asked about the TABOR refund specifically, Senate Majority Leader Dominick Moreno, D-Commerce City, indicated that lawmakers want to move away from the six-tier system. “I think we’ve demonstrated that the six-tier sales tax rebate system is not equitable,” Moreno said. “I’m sure there will be conversations about how to bring equity into the TABOR refunds.” Given that any changes to TABOR must be done by the end of the 2023 Colorado legislative session—which ends on May 8th—and state officials have done nothing by the date of this article’s publication, I doubt that anything will be done this year to rectify this tax inequality.
Yet, as I have found time and time again in my research, what happens in Colorado is often happening on the national level. Such is the case with President Biden’s proposed tax agenda.
President Biden went big in his $6.8 trillion annual budget proposal to Congress by calling for $5 trillion in tax increases over the next decade. Biden told lawmakers at his State of the Union address that his budget plan would lower the deficit by $2 trillion and that he would “pay for the ideas I’ve talked about tonight by making the wealthy and big corporations begin to pay their fair share.”
Again, it sounds great … and again, it leads us straight into Hell.
First off, it’s important to remember that it’s more than likely the debt ceiling is set to explode to $31 trillion this summer. Even if Biden gets the full $5 trillion from his tax plan, thereby cutting the deficit by $2 trillion, that’s really nothing more than a surface scratch.
Second, as I wrote about previously when it comes to the “billionaires tax” he’s including in this proposal—one that would put a 25% tax on the nation’s wealthiest 0.01% of families—it has Grand Canyonesque loopholes. CNBC broke down the numbers and if this tax were to go through, there are enough loopholes to where Elon Musk would have received a $23 billion refund for 2022. And though the CNBC model was based on a 20% tax, a billion or two isn’t going to make a massive difference in the grand scheme of things.
The other failure in the Biden tax agenda comes from where he wants to put the top marginal income rate at: 39.6% (up from 37%). From a historical perspective, this is infuriating.
During the Great Depression of the 30s and 40s, President Roosevelt came along and set into motion his vision: The New Deal. After a decade of putting all the pieces in place, he was able to see a majority of his ideas become the law of the land. One of the keystone bits to this vision was that the top earners of America were taxed at a massive rate—90%. And so it was. Between 1943 and 1964—the time when you could have a spouse, house, two kids, and a car on a single income; the time that some people refer to when saying America was “great”—the top tax bracket was 90%.
Biden’s plan is a full 50% less than what is needed to begin the process of reducing income inequality. What makes this even more grotesque is knowing that Biden spoke of FDR as an inspiration for what he wanted to achieve during his presidency while campaigning. “I’m kind of in a position that FDR was,” Biden told The New Yorker in an interview. “What in fact FDR did was not ideological, it was completely practical.” Clearly, he's lost the script.
So what should be done?
To be honest, if I were to try and make a tax program that would actually make the wealthy pay their fair share, I would do a “net worth tax.” Basically, if the person has a net worth of more than $50 million, you take all of their assets over $500, find out the grand total of everything that could be liquidated, and tax them at 25% of that sum. If it seems unfair, think about it; even if that person is at the bottom threshold, they would still have over $37 million left over—so please don’t feel too bad. Plus, if you’ve ever had homeowners or renter’s insurance, you know that having an itemized list of everything that holds value is a requirement. So, a complete listing of assets is something that these people would most likely have available.
There would be loophole closures as well. For instance, if you were to vastly undervalue something like property and sell it off quickly to prevent it from being taxed, that could fall under tax evasion. Look, I know it isn’t perfect, but the current system is hot garbage. In reality, the tax plans we have to follow in 2023 are fictitious at best. It’s hard for the average American to look at the 24k gold layout of Donald Trump’s home in Trump Towers and find it reasonable that he went many years in the 2000s not paying anything in taxes. Something has to change.
I completely understand that Republican-led economic programs are far worse than anything Democrats could concoct; I get that. But even if you are a die-hard Democrat, when you consider everything, the evidence should make you rethink your perspective on good and evil a little bit. Because if you think about it, what is more ignoble: a political party telling you exactly what they are going to do, knowing full well it will fail for everyone other than the uber-elite (GOP); or a political party that knows what will work, has espoused those beliefs openly and with knowledge, and then simply doing not enough/nothing?
If you're going to invoke the FDR, BE the FDR ...