President Joe Biden has repeatedly vowed that none of the tax hikes his administration will impose on the American people will increase the tax burden on those earning less than $400,000 per year, but that is a promise that Biden has already failed to keep.
In fact, there are five major tax hikes set to take effect on Jan. 1 that will all inevitably increase the tax burden of poor and middle-class Americans earning far, far less than $400,000 annually, according to Americans for Tax Reform.
Those five tax hikes were all included in the so-called Inflation Reduction Act — which, ironically, will most likely actually increase inflation — that the Democrat-controlled Congress pushed through both legislative chambers for Biden to sign into law earlier in 2022.
Biden’s broken pledge
Since the 2020 campaign season, before he was even elected, President Biden had repeatedly insisted that any tax increases that occurred under his administration would be focused solely on corporations and ultra-wealthy individuals.
CNBC reported in March that Biden reiterated that pledge during his State of the Union address to Congress, during which he once again vowed, “And under my plan, nobody earning less than $400,000 a year will pay an additional penny in new taxes. Nobody.”
“The one thing all Americans agree on is that the tax system is not fair. We have to fix it,” he added. “That’s why I’ve proposed closing loopholes so the very wealthy don’t pay a lower tax rate than a teacher or a firefighter.”
Taxing energy production
That isn’t exactly the case, however, as shown by the Americans for Tax Reform organization, particularly with regard to three major taxes on energy production that were included in the Inflation Reduction Act, which are set to take effect on Jan. 1, and will hit the wallets of pretty much everybody across the country.
First up is a 17 percent tax on methane emissions as part of the natural gas production process that, according to the nonpartisan Congressional Budget Office, is expected to raise tax revenues from natural gas production by as much as $6.5 billion, which will inevitably be reflected in higher household energy bills for all Americans, regardless of income.
Concurrent with that is a new 16.4-cent tax per barrel on all crude oil as well as imported petroleum products that the nonpartisan Joint Committee on Taxation has estimated will raise around $12 billion in additional tax revenue that, again, will be a burden to the average American by way of higher prices for gasoline and all petroleum-based products.
Additionally, that particular tax on oil has also been pegged to the rate of inflation, meaning that the tax burden could grow even larger if inflation continues to rise.
Finally, at least in terms of the new energy production taxes, are the more-than-doubled new rates of taxation on coal production. The excise tax on subsurface coal production has increased from $0.55 to $1.10 per ton and on surface coal production from $0.25 to $0.55 per ton, which will be reflected in higher energy bills for those whose homes receive electricity from coal-fired power plants.
Taxing retirement plans and corporations
Americans for Tax Reform also highlighted two non-energy related tax hikes that will also inevitably hit the wallets of average Americans earning less than $400,000 per year, in stark contrast to President Biden’s oft-repeated and now clearly violated pledge.
The first of those is a new tax imposed on stocks that are sold back to a company, a common trading maneuver that is integral to various retirement savings plans, such as 401(k)s, IRAs, and pension plans, which will raise an estimated $74 billion in revenue but serve to discourage such trades and ultimately reduce the retirement savings of average American workers and seniors.
Then there is the new 15 percent corporate alternative minimum tax rate on corporations earning more than $1 billion annually, which the CBO estimates will increase tax revenue by $225 billion, but which will also likely reduce the nation’s gross domestic product, result in fewer jobs, and be passed along to average American consumers by way of higher prices for goods and services.