When I was a kid, I loved the classic Disney animated adaptation of Robin Hood. In the story, Prince John imposed huge taxes on his subjects to fatten his pockets. Robin joined Little John in thwarting the Prince’s schemes and returning his ill-gotten plunder to the poor.
Hearing President Biden talk of “cancelling” college debt and providing new electric car subsidies, you might think that a modern-day retelling of Robin Hood was being staged in Washington.
But the reality is these policies will benefit Prince John at the expense of the working class Americans that our modern day Robin Hoods say they aim to help.
On college debt, while the President characterized his plan as “focus(ing) the benefit on middle-class and working families,” the initial analysis suggests it is upper-income families who will benefit.
In practice, many low-income taxpayers struggling to make ends meet will actually be subsidizing reduced debt for upper-income borrowers, while not benefitting from any of the proposed relief.
The Penn Wharton Budget Model estimates that “President Biden’s proposed student loan debt cancellation alone will cost between $469 billion to $519 billion” over 10 years – and depending on the plan’s details and future changes, costs could rise to over $1 trillion. The upper 60 percent of earners would garner 62.23 percent of the program’s benefits.
A National Taxpayers Union Foundation analysis estimates that, based on the Penn Wharton budget model, the Biden plan would cost average taxpayers over $2,000.
On the electric vehicle credits in the Inflation Reduction Act, despite many benefits of ownership, it’s unlikely many poor or middle-class Americans during a time of record inflation and rising prices will be able to afford one, even with a $7,500 credit.
Consider that in May, electric car buyers paid 22 percent more for their vehicles versus last year as average prices rose to $54,000.
Rising prices mean that the extra $7,500 won’t go very far at all. Coincidentally, General Motors recently announced raised prices for their new GMC Hummer electric vehicle by $6,250, while Ford announced price increases between $6,000 and $8,250 for its all-electric F-150 trucks.
While the bill has modest income eligibility limits, PRI’s past research has found that 79 percent of electric car credits were claimed by households making more than $100,000 per year. It’s likely that, once again, working class taxpayers will be paying to subsidize the luxury car purchase of upper-income Americans.
Despite many benefits of ownership, it’s unlikely many poor or middle-class Americans during a time of record inflation and rising prices will be able to afford one, even with a $7,500 credit.
Finally, with their plan to hire 87,000 more IRS agents, Washington liberals are channeling their inner-Prince John, planning to send out modern-day Sheriffs of Nottingham to increase audits on – and shake down more in taxes from – hard-working Americans.
While Treasury Secretary Janet Yellen directed the IRS to ensure the bill’s provisions don’t increase audits on working-class Americans, an analysis by the Heritage Foundation concludes that, “despite the Biden administration’s claims, it’s almost certain that households making less than $400,000 a year would face increased audits under Democrats’ bill.”
They cite a 2021 Government Accountability Office report noting that “from fiscal years 2010 to 2021, the majority of the additional taxes IRS recommended from audits came from taxpayers with incomes below $200,000.” TRAC, a nonpartisan data research center affiliated with Syracuse University, noted in a March report that “low-income wage earners with less than $25,000 in total gross receipts (were) being audited at a rate five times higher than for everyone else.”
Listening to the President, working class Americans were hopeful that real relief was on the way from Washington. Unfortunately, Washington’s latest spending plans coupled with record inflation and high gas prices has them feeling like the poor citizens of Nottingham more than ever before.
Tim Anaya is the Pacific Research Institute’s senior director of communications and the Sacramento office.