Warren Buffett, the billionaire Oracle of Omaha, says that Washington will likely “take a larger percentage of what we own, and we’ll pay it,” because it’s either that or cut spending. And you know how Washington feels about cutting spending.
“I think higher taxes are likely,” he warned investors at Berkshire Hathaway’s annual shareholder conference on Saturday. “[Washington] may decide that someday they don’t want the fiscal deficit to be this large because that has some important consequences.”
“So they may not want to decrease spending and they may decide they’ll take a larger percentage of what we own, and we’ll pay it.”
Presidentish Joe Biden has promised as much, too, indicating that he won’t push to extend the Trump tax cuts next year if he wins reelection in November. David Winston wrote for Roll Call last week that in April, Biden told electrical union workers that in 2025, the 2017 Tax Cuts and Jobs Act will die. “It’s going to expire, and if I’m reelected it’s going to stay expired.”
According to House Ways and Means Committee Republicans, if Congress fails to extend the Trump-era tax cuts, it means an average American family of four making $75,000 will get hit with a $1,500 tax increase. “Main Street businesses will face a 43.4 percent tax rate” and “working parents will suffer from a Child Tax Credit slashed in half” along with the standard deduction every taxpayer is due.
Remember Biden’s promise not to raise taxes on anyone making less than $400,000? If you had a dollar for every time Biden has broken that promise, you might have enough money to pay for those tax hikes he said you wouldn’t be getting.
This is what Sir Keith Joseph, Margaret Thatcher’s mentor, called “the ratchet effect” in action. When leftists take charge, they increase the scope and scale of government spending and control as much as possible. When conservatives come back into power, at best they do little more than freeze things where the lefties left things. Biden has abused it like few others, passing one massive spending bill after another, while imposing one massive regulatory scheme after another on the economy.
Meanwhile, the Wall Street Journal reported in April:
The most recent data suggests the IRS is still focused on the middle class. As of last summer, 63% of new audits targeted taxpayers with income of less than $200,000. Only a small overall share reached the very highest earners, while 80% of audits covered filers earning less than $1 million.
Biden’s so-called Inflation Reduction Act included an $80 billion budget boost for the IRS, ostensibly so those new agents could focus their audits on “the rich.” And yet, the WSJ story said, “the agency has been slow to shift its focus to high-income taxpayers, who make up a small share of total filings.” Rich people have better accountants than the IRS does; the middle class doesn’t. The IRS knows exactly which chickens are ripe for plucking.
All of these stories add up to one conclusion. Forget Buffett’s warning that tax hikes are “likely” on the way. In the form of inflation, increased audits on the middle class, and the expiration of the Trump tax cuts, they’re either already here or quickly coming.
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