BIDEN’S PROPOSED TOP MARGINAL CAPITAL GAINS TAX RATE WOULD SEND U.S. TAXES THROUGH THE ROOF

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If Joe Biden’s proposed tax hike on capital gains is passed into law, the U.S. would wind up with the highest top marginal tax rate on capital gains in the Organization for Economic Co-operation and Development (OECD), according to a new report by the nonpartisan Washington-based Tax Foundation.

The marginal tax rate is the amount of additional tax paid for every additional dollar earned as income.

The foundation’s Clifton Painter writes that when combined with the 3.8 percent net investment income tax (NIIT) and average top state capital gains tax rates, the proposal would lead to a top combined rate of 48.4 percent—significantly higher than the current 29 percent rate.

“Such a brutal tax hike would be a disaster for the U.S. economy,” said Jim Tobin, economist and president of Taxpayers United of America (TUA).

The proposal would tax long-term capital gains as ordinary income for taxpayers with taxable income above $1 million and raise the top marginal income tax rate to 39.6 percent.

The report points out that many countries seek to incentivize long-term saving by providing a lower tax rate or a partial exemption on long-term gains.

In the U.S, short-term capital gains (held for less than one year) are taxed as ordinary income. Long-term capital gains (held for more than one year) are taxed at lower rates, ranging from 0 percent to 20 percent, plus a 3.8 percent NIIT, depending on an investor’s income. In addition to these federal taxes, states tax capital gains at an average rate of 5.2 percent.

The Biden administration’s proposal would make the U.S. top capital gains rate an outlier within the OECD at 48.4 percent, joining only two other countries with rates at or above 40 percent, writes Painter.

A business must first pay corporate income tax, and investors see their gains from after-tax profits. The “integrated tax rate” on corporate income reflects both the corporate income tax and the dividends or capital gains tax—the total tax levied on corporate income. The integrated tax rate on corporate income distributed as dividends would rise from 47.3 percent to 65.1 percent under Biden’s tax plan, which would be highest in the OECD.

According to Tobin, the foundation correctly emphasizes that “Higher tax rates on individual shareholders reduce the return to saving, and higher taxes on corporations raise the cost of investment, reducing saving and investment. Lower investment levels and reductions in capital stock translate to lower work productivity, reduced wages, and lower economic output.”

Source: https://taxfoundation.org/biden-capital-gains-tax-rate-oecd/

ILLINOIS NEAR THE BOTTOM OF ALL STATES FOR UNFUNDED GOVERNMENT PENSIONS!

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“The inept, hard-left and union-owned administration of Ill. Gov. Jay Robert ‘J. B.’ Pritzker (D) continues to run the once-great State of Illinois into the ground,” said Jim Tobin, economist and president of Taxpayers United of America (TUA). “While Pritzker and his Springfield goons plot to hit taxpayers with more tax increases, a new report by the American Legislative Exchange Council (ALEC) ranks Illinois near the bottom with respect to unfunded pension liabilities for retired government employees.”

The council’s annual publication looks at each state’s unfunded government pension liabilities. ALEC ranked Illinois 49th in terms of the total liability and also per capita amount at $31,980 per person.

“Last year, Illinois taxpayers were funding million-dollar pension payouts for 148,654 retired government employees,” said Tobin. “That number for our 15th annual pension study issued by our Taxpayer Education Foundation (TEF) has since climbed to 151,391.”

“You can’t even raise taxes high enough in many cases to pay for the unfunded liabilities because what will happen then, the higher you raise tax rates, the more outmigration, certainly something Illinois has suffered over recent decades,” said Jonathan Williams, ALEC chief economist.

“TEF has and does advocate pension reforms,” said Tobin, included but not limited to,

  • Placing all new government hires into a defined contribution account as opposed to the current defined benefit system.
  • Immediately discontinuing the automatic cost of living adjustment and making promises only to increase cost of living adjustments in alignment with current financial conditions.
  • Removing all of the loopholes that allow salary spiking during the last years of employment on which pension calculations are made.

Sources:https://www.taxpayersunitedofamerica.org/15th-annual-illinois-pension-report/

https://www.thecentersquare.com/illinois/report-ranks-illinois-near-the-bottom-for-unfunded-pension-liability/article_2f85b458-d83c-11eb-a2fe-7b3d0946e1a5.html

PRITZKER ADMINISTRATION PUMMELS ILLINOIS TAXPAYERS WITH ANOTHER GASOLINE TAX HIKE!

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“Illinois has some of the highest gasoline prices in the country, and these prices are going to be even more outrageous in July, thanks to Ill. Gov. Jay Robert ‘J. B.’ Pritzker,” said Jim Tobin, economist and president of Taxpayers United of America (TUA).

A recent report shows that gasoline prices are the highest they’ve been since July 2019, when the state gasoline tax doubled to 38 cents. At that time, lawmakers put in place an automatic gas tax hike tied to inflation.

According to the website GasBuddy, Illinois has the sixth-highest average gas prices and the highest in the Midwest by far.

The price of a gallon of gas in Illinois averages around $3.30 a gallon. In nearby Missouri, gas averages around $2.80 a gallon.

The state gas tax hike in 2019 cost the average motorist about $100 more a year, according to an Illinois Policy Institute analysis.

“The Springfield Democrats doubled the gas tax for ‘necessary’ repair of roads and bridges, but the Illinois Policy Institute found at least $1.4 billion of pork spending, including funding for swimming pools and pickleball courts,” said Tobin.

The impact is felt even more by lower-income homes in Illinois. Many of the lowest income households in the country spend nearly one-fifth of their income on gasoline, three times more than the average U.S. household, according to an analysis by the American Council for an Energy-Efficient Economy.

“Jay Robert Pritzker is the worst governor in the history of Illinois,” said Tobin, “and considering some of the losers Illinois has had as governor, that’s quite an achievement. It’s debatable whether Illinois can survive his hard-left, union-bought administration.”

Source: https://www.thecentersquare.com/illinois/illinois-gas-taxes-to-increase-again-next-week/article_03ea5dea-d45d-11eb-829f-6fbbcc09e34d.html