Taxes, Corporations, and Other Myths  by Henry S. Kramer

During the 2024 State of the Union (SOTU) Address, President Biden has again shown his defiance of constitutional limitations.  This would seem to fly in the face of his oath of office to ‘defend the Constitution against all enemies.’  He labels his opponent as a “threat to democracy” when the real threat to democracy is Biden. He has reportedly issued an executive order to register illegal aliens to vote, which is barred by most states (including NY) that require citizenship to vote.

It is a myth that Congress can by statute law override a United States Supreme Court decision that was bottomed on the Court’s reading of the Constitution itself.  Below are some examples of this drawn from Biden’s SOTU speech.    

Biden called for gun law reform that would violate the Supreme Court’s NYSRPA v. Bruen decision concerning Second Amendment rights.  In addition, he has championed many efforts that would leave the Second  Amendment intact but whose purpose is to destroy gun manufacturers, gun sellers, and make the cost of firearms unaffordable; which would effectively accomplish the same thing as repealing the Second Amendment.

Biden’s latest student debt cancellation plan thumbs its nose at the Supreme Court’s holding that our presidents’ lack the power to give group debt forgiveness.  It is a fair inference that this was done to buy votes.

Biden made the pledge to seek a national standard for abortion and he did it with the Supreme Court justices sitting right in front of him.  (The justices kept decorum and showed no emotion, but his tone was defiant). It does not matter if you are pro or anti-abortion, SCOTUS has ruled that the federal government cannot pass a constitutionally valid nationwide abortion law.  The Court did not say if or when abortion was legal or illegal. The Supreme Court held that a national standard was unconstitutional.  Abortion law was for the states to decide.

Biden continued his frequently used mantra “tax the rich”.  One of his favorites is now a tax on total wealth on top of the income tax. If you tax wealth, there is a constitutional issue.  Income taxes required a constitutional amendment because the founding document required apportionment of taxes between states, which an income tax does not do.  A wealth tax might require a similar federal constitutional amendment.  But that doesn’t stop Biden and the socialist left.

A wealth tax is also unworkable, which also does not stop Biden.  A tax on unrealized capital gains is a tax on phantom income as gains in the stock market fluctuate from day to day - and sometimes go down, here today, gone tomorrow.  That is why there is no real gain until an actual sale.  In Biden’s first 3 years, the stock market went up, then down, then up.  If unrealized wealth is taxed when the market goes up, when the market goes down, unrealized losses should be deductible and, thus, lower federal tax receipts for that year.  Oops!

Then there were his proposals that would fuel the inflation and shrinkflation, which he condemned in other parts of the speech. 

He proposed raising taxes on corporations.  But it is an economic myth that ultimately corporations pay taxes. Who really pays them?  Real people do.  You do.

Corporations may first look for a different format (a loophole) that would not be taxed.  Or, corporations may pay taxes and then pass the new corporate taxes on to consumers (inflation!).  The corporation may reduce dividends to stockholders (your pension plan and IRA) or downsize the amount of product in the same size package (“shrinkflation”).  Ultimately, natural persons pay the price of corporate taxes.  There is no free lunch.

Left wing politicians love raising corporate taxes because consumers pay them indirectly as corporations pass through the tax as price increases.  Consumers are told to blame the “greedy corporations” for the price increases, not the free spending politicians who proposed the higher taxes.  (Note, several bills in Congress would add an excise tax of up to 50% on guns and ammo, which accomplishes the same thing; the corporation pays the tax and passes it along to consumers as higher prices.  The “greedy corporations” instead of the “greedy government” gets blasted for the price increases). 

Keep in mind that every time taxes go up or the government grants new money to a group of people, new regulations are imposed.  Those costs add to why food, energy, and other purchases keep costing you more.  Joe Biden doesn’t solve our problems, he creates them.