Paying the Bills

President Biden has announced his $2 trillion infrastructure proposal which has already drawn mixed reviews.  Along with containing several items that are not really infrastructure related the other major concern is how to pay for it.  The President has assured us that no one making under $400,000 will see their taxes go up.  Instead he says the bill will primarily be paid for by taxes on the rich.  This is a commonly used position when politicians try to sell their spending plans.  It’s a good selling point because most of us don’t consider ourselves to be rich at least in terms of money.  It’s always appealing to hear we are going to benefit from something that someone else will have to pay for.  History and reality of course tell us that is rarely the case.  We should all beware of promises to tax the rich by those who then can decide who is in that category.  In other words the government often considers us to be richer than we think we are. As is usually the case when this type of spending program is introduced, there is a promise of high paying jobs.  Keep in mind those who lost their jobs when the Keystone XL Pipeline project was shut down are still waiting for the new jobs they were promised.  For agriculture this proposal will bring some difficult decisions.  There’s no denying that our infrastructure needs attention.  Roads, bridges, waterways and broadband are vital to agriculture and rural America.  At first glance this proposal sounds like just what agriculture has been asking for but as the old saying goes “be careful what you wish for”.  The catch here is in how the improvements will be paid for.  Already there is talk of rolling back the federal estate tax exemption and eliminating the step-up basis for inherited assets.  Agriculture in the past has drawn a line in the sand on these tax issues. Will they continue to do so?  An even more immediate concern is the proposal to raise the corporate tax rate from 21% to 28% and reduce the 20% qualified business income deduction used by many farms and small businesses.  This is where the definition of rich starts hitting closer to home not to mention that companies that see their taxes go up usually pass that increase on to their customers. It will be interesting to see how this plays out.  Hopefully the final bill will be more targeted to actual infrastructure projects but regardless of what’s in it, we will all pay for it one way or another. Nothing wrong with the “if everyone benefits then everyone should help pay” approach.  Just don’t think you are getting something for nothing. As far as the non infrastructure parts of this “infrastructure” plan we need to ask ourselves if the end justifies the means.  As is usually the case the answer will be in the eye of the beholder.