The National  Memo Logo

Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

Tag: biden taxes

Stocks Gain Despite GOP’s Dire Warnings About Biden

Reprinted with permission from Alternet

In addition to proposing an increase of the United States' corporate tax rate from 21 percent to 28 percent, President Joe Biden began a push this week for a major hike in the capital gains tax. Republican Sen. Shelley Moore Caputo of West Virginia and others on the right, not surprisingly, slammed the proposal and predicted the worst, and some on the right felt vindicated when the stock market dipped sharply after Biden's announcement.

But liberal economist and New York Times columnist Paul Krugman noted there was little warrant for their dire predictions on Twitter Friday morning.

Caputo, during a Friday morning appearance on CNBC's Squawk Box complained, "Is there not a tax that's not going to be raised just in enormous amounts to fulfill the Green New Deal and other promises that were made during (Biden's 2020) campaign? I mean, I don't see why the thirst for raising taxes is so incredibly large when we see the impact that's going to have on our economy, on our job creation and all that…. I can't support that."

The Wall Street Journal's conservative editorial board had an equally negative reaction to Biden's proposed capital gains tax hike, writing, "The lesson that investors should have learned by now is that Bernie Sanders was right when he predicted that Joe Biden would be the most left-wing president since FDR. Moderate Joe was always a mirage."

On Thursday, Laura Davison and Allyson Versprille of Bloomberg News reported that according to sources, Biden proposes "almost doubling the capital gains tax rate for wealthy individuals to 39.6 percent" or as high as 43.4 percent from "the current base rate of 20%." The S&P 500 took a slight dip on Thursday, but the following day, Krugman assured Twitter users that Biden was not causing the sky to fall.

Posting an S&P 500 chart showing a 52-week period, Krugman tweeted:

Krugman, in his Twitter thread, added that he "was struck by how small the reaction to the tax announcement was — less than 1 percent on the day":

White House Press Secretary Jen Psaki weighed in on fluctuations in the stock market when a reporter, at a press briefing on Friday, mentioned Biden's proposal for higher capital gains taxes. Psaki told the reporter, "I've been doing this long enough not to comment on movements in the stock market, but I did see just data, factually, that it went back up this morning."

Bloomberg News' John Authers, in an article published on Friday, explains, "Stock markets don't like it when politicians say they are going to raise capital gains taxes. This should come as no surprise to anyone, and so, Wall Street's response to Thursday's Bloomberg News exclusive that President Biden is planning a big hike in CGT was predictable."

Authers goes on remember how capital gains taxes can affect the stock market, writing, 'What are the direct effects of a CGT hike? If you were thinking of selling shares anyway, it makes far more sense to sell them before the end of the year…. It's not clear that higher CGT does anything more than bring sales forward. The way the market handled the last major CGT increase, at the end of 2012, is instructive."

Recalling how the stock market behaved in 2012 and 2013 — when Barack Obama was president and Biden was vice president — Authers notes, "As it grew clear that higher capital gains taxes were coming, the S&P 500 languished and went sideways for the last few months of the year, closing roughly where it had been in March. Then, 2013 turned out to be a great year; stocks started their rally at the beginning of January and never really stopped."

Biden Wants To Raise His Own Taxes, Enraging Republicans

Reprinted with permission from American Independent

A group of more than 150 House Republicans is demanding to know why President Joe Biden, who once used a legal tax loophole, is now pushing to close tax loopholes. And the group's head is threatening to investigate the matter, if the GOP regains a House majority someday.

Indiana Rep. Jim Banks chairs the Republican Study Committee, the main coalition of House conservatives. In a letter on behalf of the group last week, he accused Biden of "hypocrisy" for using "a tax shelter strategy derided by the Left to avoid paying Obamacare taxes." Citing the Bidens' voluntarily released tax returns for 2017, 2018, and 2019, he noted that they received income through two corporations, avoiding self-employment taxes. Banks demanded to know whether the Bidens "intend to undo" this by paying more in taxes.

In a Fox News interview on Monday, Banks threatened to launch an Oversight Committee investigation into the Bidens' taxes if his party wins back the majority in the House next year.

"House Democrats used their oversight power to subpoena Trump for his tax returns, but they've completely ignored Joe Biden's abuse of our tax code," he complained. "When we take back the House in 2022, Oversight Republicans won't forget about Biden's legally dubious tax avoidance schemes."

Banks added: "Joe Biden advocated for expanding Medicare, and is pushing to close tax loopholes and for a $3 trillion tax hike. At the same time, 'Amtrak Joe' made $13 million through speaking fees in just three years, then skimped over $500,000 from Medicare recipients through tax loopholes."

Despite Banks' claims of questionable legality, the Fox News report describes Biden's actions as "entirely legal" and notes that the president has pushed to close these kinds of loopholes in the past.

And unlike his predecessor, Biden made his tax returns public during his 2020 campaign. Based on that information, the Wall Street Journal reported in July 2019 that Biden had used the loophole, while noting that the Obama-Biden administration unsuccessfully pushed in 2016 to eliminate that and other tax loopholes.

A campaign statement at the time defended Biden's actions. "The salaries earned by the Bidens are reasonable and were determined in good faith, considering the nature of the entities and the services they performed," the statement said, calling the use of the corporations a "common method for taxpayers who have outside sources of income to consolidate their earnings and expenses."

The GOP's letter comes after Biden pledged to increase taxes on corporations and on those who — like himself during his time in the private sector — earn more than $400,000 annually.

By closing corporate tax loopholes and restoring some pre-Trump corporate tax rates, Biden hopes to raise funds to help pay for his $2 trillion American Jobs Plan for infrastructure investments over the next decade.

Unlike Biden, Banks has opposed efforts to increase the tax burden of the wealthiest Americans. He signed a pledge never to raise taxes and even pushed to make Donald Trump's massive 2017 tax cuts for the wealthiest Americans permanent.

If Biden's infrastructure plan becomes law, it will provide trillions in investment in roads, bridges, broadband, water, transit, and other priorities — and support more than 15 million jobs over the next decade.

Trump, whom Banks backed, argued in 2016 that his own use of loopholes to avoid taxes was proof of his own brilliance and made him uniquely qualified to fix them. He did not do so.

Published with permission of The American Independent Foundation.