President-elect Joe Biden announced Monday that he will nominate Janet Yellen, a former chairman of the Federal Reserve Bank, to be his Secretary of the Treasury.
What does that mean to American taxpayers?
To start, it means your personal income taxes will increase, your 401k will drop in value as the Biden administration and Yellen increase the corporate tax on the corporate stocks in your 401k, and your cost of gasoline and energy will increase.
Most telling, Yellen has previously stated her opposition to the Tax Cuts & Jobs Act, also known as the "Trump tax cuts" which reduced the corporate income tax and personal income tax.
She wrote in a co-bylined op-ed in the Washington Post in 2018 that there was no need for a tax cut because, “the economy was already at or close to full employment and did not need a boost.”
Americans who found jobs after the enactment of the tax cuts would disagree. After the tax cuts were signed into law in December 2017, the unemployment rate dropped from 4.1% down to 3.5% just before the pandemic hit. African American unemployment dropped from 6.7% to 5.8% and Hispanic unemployment dropped from 5.0% to 4.4%.
5,122,000 jobs were created from December 2017 to February 2020. The labor force participation rate rose from 62.7% to 63.4%.
Median household income increased by $4,440 or 6.8% in 2019 -- the largest one-year wage growth in history.
All that will run backwards by repealing the tax cut that gave us the growth and jobs.
Biden and Vice Presdient-elect Kamala Harris said repeatedly during the 2020 presidential campaign that they will “eliminate” the Trump tax cuts on “day one.” Such a repeal would impose a $2,000 annual tax hike on a median-income family of four and a $1,300 tax hike on a median income single parent with one child.
Repeal of the tax cuts also means the individual mandate tax will come back into force, hitting five million households with a $695 - $2,085 tax. 75% of these households make less than $50,000 per year.
The liberal Yellen will gladly carry out Biden’s tax hike plans. Biden wants to double the top capital gains rate to 40%, the highest since Jimmy Carter in 1977. He wants everyone -- “every single solitary person” -- to pay capital gains taxes at ordinary income tax rates.
Biden also wants to impose yet another middle-income tax hike by eliminating the step-up as the basis for capital gains. When you try to leave an asset to your spouse or children, he will force an immediate capital gains realization upon transfer of the asset.
Trump permanently lowered the U.S. corporate income tax to 21% which finally made America competitive with other nations on tax policy. Yellen will be tasked with helping Biden raise the corporate tax rate to 28%, even higher than Communist China’s 25%.
The Treasury also oversees the IRS, so look for Biden and Yellen to increase the IRS enforcement budget so more agents can audit your small business.
Choosing Yellen tells us that Biden will keep his promise/threat to impose a tax on energy. Yellen is a longtime supporter of placing a tax on energy.
She has endorsed an energy/carbon tax of $40 a ton which translates into a 40-cent increase in the cost of a gallon of gasoline when you fill your tank. This energy/carbon tax will also increase the cost of your home heating oil, natural gas, and the cost of all products shipped to stores or your home by truck, plane, or rail.
Once in law, the Yellen carbon tax automatically ratchets up each year. A tax increase every year, on autopilot, without a vote from congress. A new gusher of your tax dollars pouring into Washington DC, a politician’s dream.
Even former Secretary of State Hillary Clinton refused to endorse such a tax when she ran for president in 2016 because her studies showed a carbon tax would devastate low and middle-income households. And picking Yellen also signals that it is full speed ahead on increasing spending.
Rather than enact the $500 million COVID-focused legislation from the Republican senate, Yellen and Biden support the $3 trillion spending spree to subsidize states and big cities that bankrupted themselves due to decades of overspending and mismanagement plus gold-plated pension for unionized government workers.
Promising to nominate Yellen to lead the Treasury Department, an advocate of higher income taxes and new taxes on energy/gas demonstrates that Biden will follow through on his threat to raise taxes at least $4 trillion and did not mean a word of his promise to never raise a penny of any tax on taxes on anyone who earns less than $400,000. Let's be honest, most people filling up their tanks with gas make somewhat less than $400,000.