A scaled down version of the original bill that failed last December, is again being pushed in the Senate. The new package which would total around $1T in new spending, focuses on health care costs and energy.
Included in the bill are a range of tax increases to fund the proposed additional spending. Those tax increases are focused on entrepreneurs and corporations, and would amount to an additional 3.8% on business owners earning more than $400K annually.
This additional “Medicare Tax” is currently only levied on net investment income for upper income taxpayers. If passed, this increase would now be levied on all regular income from pass-through entities.
The bill further hurts entrepreneurs by extending tax provisions currently set to expire in 2025 that limit the amount of losses that pass-through owners can deduct on their returns. It’s predicted that these two changes would bring in an additional $300B in taxes over the next decade.
Let me leave you with this.
When I first read about this, I couldn’t believe my eyes. Why the new administration would waste precious time and political capital on any bill that’s already failed is beyond imagination and understanding.
Spending time on anything that’s a non-started when you’re way behind in the polls and the President’s approval rating is sitting in the low 30’s is simply ludicrous.
But let’s also remember that the main thing ruining our economy is inflation. Even the worst sophomore at a third rate college taking macroeconomics could tell you that increasing spending in a time of rampant inflation will only worsen the problem.
Prices of goods and services primarily rise because of a scarcity in supply. In any market, where there are more buyers than sellers, prices will naturally rise. When you increase demand by pumping even more money into an economy, you’ll only exacerbate the problem.
The main thing that any government can do to reduce inflation is to cut back its spending, not increase it. Once you get past the problems of raising already ridiculously high taxes on the small business owners who drive the economy in the first place, why would anyone intentionally try to hurt an already suffering economy right before voters are going to the polls?
We can only hope that the Senate will again come to its senses and defeat this bill.
We’re all going to get through this. Let’s get through it together.
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