A misguided new tax that could target the assets of farmers, innovators, and other business owners would discourage investment and hinder job creation. There’s a reason why the federal government doesn’t currently tax assets – it’s a bad idea.
In his State of the Union address, President Biden has proposed raising taxes, including a plan to tax the assets of those he has decided are unnecessarily wealthy. Specifically, it would tax the assessed change in value of held assets, a strategy that no doubt has some politicians happily nodding their heads but leaves everyone else shaking theirs in dismay. Taxing assets has never been done before, mainly because most people understand it would do far more harm than good.
The federal government has always taxed income, not assets. No one likes to pay income taxes, but we all realize they are a fact of life and essential to maintaining public infrastructure, national security, and other services the government provides. However, when taxes are levied on the change in value of privately held assets, the equation changes.
President Biden’s plan would treat both earned income and accrued value of assets the same, taxing them at a 25% rate, even when those assets have not been sold and no profit realized. That’s a big change from the status quo and, as the Wall Street Journal points out, would not only be unfair but also possibly unconstitutional.
Even though the asset tax is being sold to the public as something that would only affect a handful of super-wealthy Americans, the reality of it could be far different. A wide variety of businesses such as farms, ranches, tech companies, and manufacturers could be caught up in the new tax scheme.
Ohio companies like mine could easily be impacted. Privately held manufacturers play a significant role in this pivotal state industry, which employs more than 650,000 workers at above-average wages. If company owners were hit with a punitive wealth tax, they could be forced to sell key assets to pay the bill, directly impacting their ability to compete and meet their payrolls. Ohio jobs could be lost and $112 billion in state manufacturing output could be put in jeopardy.
Ohio Sen. Sherrod Brown should stand up in opposition to this unfair, economically destructive new tax. Starting down the slippery slope of taxing assets would be a mistake.