By John Ubaldi, “Ubaldi Reports”

The philosopher George Santayana, once stated, “Those who do not remember the past are condemned to repeat it.”  President Biden is in the process of repeating history with his “Build Back Better” plan which is formally being debated in the Senate after having passed in the House.

Biden plan has been made more complicated with Democratic Senator Joe Manchin of West Virginia stated on Fox News Sunday with Brett Baier that he could not support the “Build Back Better” plan.

Instead of reevaluating his plan President Biden is still in the process of preparing to repeat the mistakes of the past. If Biden and the Democrats implement his “Build Back Better” and the massive tax increase that will accompany it, they would be repeating failed economic policies of the past.

What Biden and the Democrats are proposing with their tax policy proposal is eerily similar to the tax increases proposed by President Franklin Roosevelt in 1935, expanded in 1936, and given added strength in 1937.

By 1935, America had recovered from the losses sustained in the 1929 Stock Market crash, but Roosevelt instituted various tax increases on corporations and individuals which sent a recovering U.S. economy back into the throes of a second Great Depression only to have the economy emerge with the nation’s entrance into World War II.

In August of 2020, Sen. Bernie Sanders while interviewed by Chuck Todd on NBC’s “Meet the Press,” stated that if elected “Joe Biden will become the most progressive president since Franklin Delano Roosevelt. And that, in this moment, is what we need.”

Right now the progressive polices of President Biden have only fueled rising inflation, supply change shortages, labor shortages and high fuel costs, what will higher taxes and additional regulations have on the U.S. economy struggling to emerge from the effects of the forced economic lockdown?

Will history repeat itself again?

America needs to understand fully realize its history just like in the past the nation is just coming out the most severe economic downturn since the Great Depression, and just like in the mid-1930’s Democrats again are proposing similar tax increases.  If these tax increases take effect we could be replicating history with disastrous economic results.

With the America beginning to emerge from the ravages of the Great Depression, by the spring of 1937, the U.S. had regained the early losses of production, profits and wages to pre-1929 levels.

Before the presidential election of 1936, President Roosevelt proposed a wealth tax in 1935.  Eventually the U.S. would pass the Revenue Act of 1935 which raised federal income taxes on the wealthiest of American’s.  This act levied a progressive tax up to 75% on the highest earners of over $1 million.

The Revenue Act of 1935 further expanded the following year in 1936 by making taxes permanent on individuals making over $5 million and on the earnings of corporations, and given real teeth in 1937.  By eliminating legal tax loopholes and placing burdensome regulations on businesses the Roosevelt administration created a second Great Depression in the U.S. only to have America pullout of it with its entry into World War II.

Prior to serving as Vice President, then congressional representative John Nance Garner who in 1918 while serving on the House Ways and Means Committee championed a maximum tax rate of 77%, than spoke to one of his fellow Democrats by stating, “We have to confiscate wealth.” He would later serve as vice president during FDR’s first two terms in office. 

With the strong pressure from Roosevelt, Congress removed all legal tax-avoidance planning with the Revenue Act of 1937.  At that very moment corporate money was immediately subjected to distribution with taxes levied at an extreme high individual level. The same year also began the introduction of a 1% Social Security tax on the first $3,000 of wages.

The results were predictable as Jay Starkman wrote in the Wall Street Journal, The Dow Jones Industrial Average crashed to 114 on Nov. 24, 1937, from 190 on Aug. 14, a 40% decline. Gross domestic product fell by more than 5% between 1937 and 1938. Unemployment, roughly 12% in May 1937, climbed to 20.7% in April 1939. Industrial production tumbled 33% from the spring of 1937 to May 1938 and didn’t return to its 1937 peak until late 1939.

Various factors contributed to the sharp decline in the U.S. economy, including a contraction in the money supply, and a doubling of the bank reserve requirement ratios.  The biggest reason was the passage of the Revenue Act’s with its immediate and substantial tax increases.

As Starkman wrote that without much warning, U.S. businesses and individuals had to raise large amounts of cash quickly by cutting back on workers and investments to pay taxes that would be coming due.

Right now the U.S. in 2021 is beginning to recover from the coronavirus economic collapse unleashed on the world by China.

History would again repeat itself, as Joe Biden has already stated that he would repeal the Trump tax cuts, restore the top federal tax back to 39.6%, and raise the corporate tax income rate from 21% to 28%.  Biden’s tax plan also will limit the low capital-gains tax rate to the first $1 Million in profits, then finally tax Social Security to income above $400,000.

In 2011 Stephen J. Entin, then president of the Institute for Research on the Economics of Taxation, told a congressional committee that the “income tax is heavily biased against saving and investment” and that the “burden of higher taxes on capital formation falls largely on labor in the form of lower wages and hours worked.”

The taxes proposed by Biden aren’t the only taxes being advocated at this time by Democrats.  Democratic Senator Elizabeth Warren of Massachusetts continues to advocate a wealth tax of 2% and 6% on assets valued more than $50 million and $1 billion.  Wealth taxes have been abandoned in Europe, as they have had always resulted in a depressed economy.

Starkman mentions the taxes being proposed and those that already have been implemented in blue states across America.  Progressive New York lawmakers propose raising the top marginal income-tax rate of 8.82% to 9.62% and 11.85% on the “super rich.” That’s on top of New York City’s 3.876% income tax. California lawmakers have proposed raising the Golden State’s 13.3% top rate—highest in the nation—to 14.3% and 16.8%, applied retroactively to the start of this year, in addition to a wealth tax. New Jersey is set to extend its 10.75% top rate to filers earning between $1 million and $5 million. The Garden State governor’s budget would also make permanent a 2.5% corporate surtax, creating an 11.5% state corporate tax.

Right now the progressive state of California has the nation’s highest unemployment and the greatest income inequality of any state in the nation. Do we want the economic policies of California placed on the U.S. economy?

If one wants to view firsthand the impact of Biden’s and Democrats tax proposals will have on the U.S. economy, one only has to look to California.  California is the wealthiest state in the union but also the poorest.  The state has the highest individual state tax rate in the nation, and as a result California creates the greatest income inequality of any state, the largest homeless population, and 20% of state’s population lives in poverty.

The burdensome regulations placed by progressive Democrats have resulted in cataclysmic fires that have engulfed the state, and are now the norm not the exceptions.  The state faces brown outs from a shortage of energy with its failed “New Green Polices.”

The Biden-Sanders Unity Task Force document that Biden plans on enacting if elected, to understand how this plays out in real time just look to California.

If this isn’t enough New York State is considering an annual mark-to-market income tax, or M2M, in which stocks and other securities held by residents are valued annually and the gain immediately taxed, rather than waiting until a sale or exchange.  A nightmare to calculate, a state-level M2M would also burden people who move to another state, resulting in a double tax on the eventual sale of their assets.

Even Progressive Democratic politicians Rep. Ilhan Omar and Sen. Bernie Sanders have introduced the Make Billionaires Pay Act.  This act if passed would impose a one-time 60% M2M tax on gains in wealth between March 18 and Jan. 1, 2021, by individuals with assets valued at more than $1 billion for everyone who invests in the stock market.

For the Democrats death is no escape for paying taxes, as the Democratic Party plans on calling for raising the estate taxes “back to the historical norm.” What this means no one knows and how high no one knows.

Now not every tax will become law, but enough will pass that also goes along with a host of regulations that will be reminiscent of the Obama-Biden administrations stagnant economy with flat wage growth.  This time the economic policies of the Biden administration would be on steroids and a repeat of 1937 is only inevitable.

As was the case in 1937, if Joe Biden’s tax proposal’s and those of the progressive Democratic Party become law the nation would repeat the mistakes of FDR, and America will face an economic calamity.

Remember “Those who do not remember the past are condemned to repeat it,” unfortunately the American people will be the victims of his failed economic policies!