Biden promises not to raise taxes, but middle earners will pay for his regulatory free for all.

Presidential candidate Joe Biden has pledged that his administration will impose no new taxes on Americans making $400,000 or less and that there will be “no raising taxes . . . on mom and pop businesses.” Both his policy platform and his record belie that promise.

During their first campaign for the White House, the Obama-Biden ticket “firmly” pledged that “no family making less than $250,000 a year would see any form of a tax increase.” They soon pushed through the Affordable Care Act, which included a tax penalty for failing to purchase health insurance, paid primarily by people earning less than $50,000 annually. Though that levy is gone, the ACA still includes a poorly implemented tax on medium-size and large employers that don’t offer health insurance to most of their workers. I estimate that this penalty, if enforced, would cost low-income families an average of about $700 a year, including in the average those whose employers aren’t penalized. The penalty’s effect on job availability would make its cost felt by a wide swath of workers.

The ACA also included many other significant taxes that were so well hidden that the Congressional Budget Office overlooked their effects when it originally scored the bill 2010. Later CBO had to backtrack.

Today Mr. Biden takes a similarly veiled approach to advancing the “clean energy revolution and environmental justice” outlined in his platform. Instead of using a carbon tax, which would use market forces to reduce the economic damage but also obviously violate his tax pledge, he would apply the force of regulation. He aims, for example, to eliminate emissions for passenger vehicles, which would make buying a new car thousands of dollars more expensive. As President Trump is apt to explain, regulations are “stealth taxation, especially on the poor.”

And the poor would suffer most under Mr. Biden’s platform. Dividing U.S. households into five income groups, I have estimated the regulatory costs of each quintile and expressed them as a percentage of each quintile’s average income. The costs to the bottom group amount to 15.3% of its total income—representing a burden equal to all the taxes they currently pay. This group would experience part of the cost as lower wages, but the biggest bite would come in diminished purchasing power due to higher prices for energy, cars and other consumer goods.

The top quintile, by contrast, would suffer the least from regulatory restoration, with labor, energy and other consumer rules amounting to only a 2.2% implicit tax on the highest earners.

This estimate includes not only regulations Mr. Biden has explicitly said he would revive, but also many of those that would be necessary to meet the goals outlined in his platform. My analysis of a hypothetical revival of the regulatory state focuses on 10 of Mr. Trump’s key deregulatory actions—five of which reverse employment regulations such as employer mandates—and on a revised definition of “joint employer.” These employment regulations held down productivity and wages and reduced job opportunities, especially for less-skilled workers.

Not only has Mr. Trump removed hundreds of regulations that Mr. Biden is inclined to resurrect; the president has also slowed the pace of new rules compared with prior administrations. The nearby chart therefore also includes the costs of a revival of the regulatory state, by which I mean returning to the prior trend of new rule making in the regulation of employment, consumption and energy. The chart also shows the costs of a ban on fracking—another policy Mr. Biden has not full-throatedly endorsed but that would be necessary to meet his goal of 100% clean energy by 2035—which would increase consumer prices for electricity, heat and gasoline.

None of this should be a surprise. An active regulatory state is a playground for the privileged class to indulge its own preferences at the expense of ordinary Americans.

Mr. Mulligan is a professor of economics at the University of Chicago. He served as chief economist of the White House Council of Economic Advisers from 2018-19


[Post edited by Hoos Operator at 10/26/2020 5:52PM]