President Joe Biden, eager to get more tax money to pay for the faults of others along with his own disastrously irresponsible, inflationary overspending, has said that American billionaires have tax rate of just 8%. Here, then, is a great excuse to hit this relatively small group of 700 or maybe 1,000 people with a fiscal fist as big as the Treasury Department without worrying about losing millions of votes.
A difficulty for Biden, however, is that the tax rate is more than three times bigger than he said, 25.6%, either demonstrating that he made a major mistake or qualifies to be called a political trickster. I endorse the second possibility, seeing as how the tiny-tax assertion could confuse the public enough for him to seem a hero catching cheapskate billionaires even though the top 1% of taxpayers deliver something like 43% of all federal taxes.
The way Biden arrives at his deception is by saying the billionaires and still other super-rich tax targets pay nothing for the unrealized gains they have in their stock portfolios. In fact, nobody does. The Constitution limits the personal income tax to actual income a person has received, not something that might be converted into income someday. Understand, too, that when stocks are finally exchanged for money, the money is in fact taxed.
But there is this to be said for taxes: If they are fair and honest, they are the best way to finance our government and, if they become egregious, the government should find ways to reduce the costs to what is affordable.
The worst and most common fiscal threat these days is something else: over-borrowing. Our debt has grown to an unbelievable $31.4 trillion with an ever-increasing expense of borrowing having sky-high consequences, a yearly cost of $352 billion in 2021, $475 billion in 2022 and a predicted $640 billion in 2023.
As far back as 1960, Congress decided that the federal government should establish a debt limit keeping spending and taxing within reasonable bounds by allowing no borrowing beyond cautious calculation. Knowing things could still go wrong, Congress also gave itself permission to vote to end the borrowing limit if a majority concurred. Guess what? The limit has been raised 68 times since then.
In 2006, a smart U.S. senator named Barack Obama explained it was a “leadership failure” when the government couldn’t pay its own bills from tax revenue but had to borrow and pay loads of interest. The interest paid that year, the senator said, was more than the costs of Medicaid, the Children’s Health Insurance Program, education, homeland security, transportation and veterans benefits, all combined.
One of Biden’s biggest mistakes was to spend unneeded trillions on COVID-19 recovery on top of the trillions enacted under Trump that did the job by themselves. Various other factors helped initiate a recent debt-limit crisis that would have led to a ruinous default if we had not paid owed interest to foreign countries.
The catastrophe was averted because the debt limit was dropped by way of a compromise between Biden and Republican House Speaker Kevin McCarthy who persuaded Biden to reduce some significant costs. What we need now is compromises that adjust taxes and spending in accordance with reason and reality on both sides of the aisle and a new president in 2024 unlike Biden, Trump or the previously cited sagacious senator who broke spending records as a president.
Tribune News Service