FY 2023 Budget

House Budget: The President’s Fiscal Year 2023 Budget, March 29, 2022

Earlier this month, the Committee held a hearing on Ensuring that Women Can Thrive in a Post-Pandemic Economy. My comments were based on last year’s budget proposals, with recommendations on how these can be enacted. Please take a second look at these as you consider the President’s 2023 Budget Proposals. They should also be the central focus of Build Back Better - with other items delayed until after the midterm elections. The current Democratic Majority is not robust enough to pass them at this time - nor should they be passed if it is at the cost of securing a permanent refundable child tax credit.

The President’s Budget also reportedly includes tax law modifications - including increasing the Corporate Income Tax Rate to 28%. Barring comprehensive reform, this is a good move. The Pass-Through, Capital Gains and Dividend rates should match this rate (and the ACA surtax repealed accordingly). Rates are essentially at 23.8% now. In a perfect world, a bipartisan 26% rate could be passed with a promise to quit revisiting the issue every four years. 

I doubt that the Minority would go along with this. Both sides raise too much money playing ping pong with tax rates. Heaven forbid we could find some kind of stability.

A key feature of my proposals for distributing benefits to families through the child tax credit, health benefits, childcare benefits and expanding leave are found in my  proposed tax reform plan - which replaces corporate income, pass through and sole proprietor tax subsidies with a uniform employer-paid subtraction value added (or net business receipts) tax. The latest iteration of the plan is also attached.

A key element that must be highlighted again is our proposed Asset Value Added Tax, which would replace capital gains, dividend and interest taxation at preferred rates. It would only have one rate - 28% (although, again, I urge a bipartisan 26% rate) and would be collected with each payment or transaction. It would be marked to market at initial public offering, option exercise and the first sale after inheritance, gift or donation. 

The only exception would be sales to broad based employee stock ownership plans. There is already such a carve out in capital gains taxes for ESOP conversions. This benefit should be eligible for all sales to ESOPs, including those that are publicly traded.

Taxing transactions rather than year-end results ends tax benefits that reward failure. Our plan separates distribution of benefits, asset taxation and a goods and services tax from taxing wages and salaries. While salary taxes can be added to our proposed subtraction VAT, there would be no offsets for taking strategic losses. Again, quit subsidizing failure with the Tax Code!

Enacting a goods and services tax, which allows for border adjustability on exports and full taxation on imports, assures that everyone pays taxes. The child tax credit should be high enough for families to pay such taxes without pause (along with increased minimum wages). 

Enacting such a tax would allow the end of the inheritance tax. Inherited assets would be taxed when sold - and not until then - so that family businesses and farms would be held harmless. This would also end the need to retain preferred retirement accounts and life insurance policies designed for tax avoidance (aside from those favoring employee-ownership). There is no evading a goods and services tax.

I fully support increasing NATO spending and direct military aid to Ukraine. I had favored a diplomatic solution yielding the eastern portion of the country to Russia, as long as the remainder could join NATO. Comrade Vlad, in the face of having his army killed, has reduced his war aim to just those territories. He lost the right to set terms when he started bombing Ukrainian cities for no strategic reason.

The President’s Budget needs one more addition. Poland needs some new aircraft so that it can transfer its Russian fleet to Ukraine. Add this item - or have it enacted as a supplemental. Ukraine needs these aircraft to destroy the ability of Russian artillery to shell civilian population centers. These planes cannot be based in either Germany or Poland, but with the right anti-missile systems, some kind of airfield could be built in Ukraine. Put a Patriot battery on their shopping list.

Just talking about this issue - including questions for Budget Director Young - could convince Putin to stop shelling civilian targets. It is time to increase the pressure and explore the question of whether Russian nuclear forces are as pathetic as its invasion force. If so, appeasement must end.

Attachment: Ensuring Women Can Thrive Video

Attachment: Tax Reform (with videos)