On multiple occasions, President Joe Biden vowed that Americans earning less than $400,000 per year will never experience a tax increase under his administration.
However, in an opinion piece published Saturday, Washington Examiner columnist Bruce Thompson explained why Biden’s claim rings hollow, insisting that the president’s corporate tax hike will, in fact, impact Americans in that particular earnings category.
According to Thompson, the president “either does not realize or is ignoring the impact his corporate tax increases will have on millions of middle-class people earning far less than $400,000.”
Thompson explained how it will happen, saying that corporations simply pass on whatever tax increases they experience to consumers in the form of higher prices and lower wages.
Higher prices and lower wages
“Working people, consumers, savers, and investors will be paying the new taxes for years to come,” Thompson said of Biden’s proposed $2 trillion in corporate tax hikes.
He pointed to a Tax Policy Center study that found “most households would pay more taxes in 2022” while “about three-quarters of middle-income taxpayers would face a tax increase” under Biden’s corporate tax plan.
What’s more, Thompson also cited a Federal Reserve Board study that concluded a corporate tax hike would cause “significant reductions” in employee income.
“Based on their estimates, the Biden corporate tax rate increase could cost a household earning $80,000 as much as $3,360 a year in lower wages,” Thompson noted. “A 25 percent tax rate would cost this family nearly $2,000 a year.”
Meanwhile, a paper from the National Bureau of Economic Research (NBER) observed “significant effects of corporate taxes on prices,” with consumers picking up the tab for approximately 31% of corporate taxes.
Retirement plans in trouble
Thompson went on to point out that over “100 million people have 401(k)s, over 60 million people have IRAs, including millions of retirees, and millions more have pension plans.”
A corporate tax hike will have a negative impact on the stock market, meaning “these people could see their retirement savings decline.”
“The claim that no one who makes under $400,000 will be hit by the Biden tax increases is simply not correct,” Thompson concluded, adding that “millions earning much less will face lower wages and income, higher prices on basic household goods and services, and lower retirement savings in their 401(k)s and pension plans.”