LARRY KUDLOW: Biden wants to punish success by redistributing income and wealth

The stock market, which got clobbered today, is not always right as a short run predictor, but it does give us a sense of whether the health and wealth of the country is going up or down.  

Last year, for example, which was Joe Biden's first full year in office, the S&P 500 fell 18%. This year, while the market got off to a good start, it's now faltering badly and is all the way back to flat on the year-to-date. 

This past week in particular after hearing from Jay Powell and the Fed and Joe Biden and his $5 trillion tax hike, the market has started plunging again.  The Dow is off about 1,500 points and the S&P is down 5%.  

You've got a Fed chair who thinks he has to crush the economy instead of targeting inflation price indexes and you've got a president who's being dominated by the socialist left in his party. Are Bernie Sanders and Elizabeth Warren really running the White House? Take a listen to what Senator Ted Cruz had to say last night:  

SENATOR TED CRUZ: "The sad truth is the socialists are in charge of the White House. Joe Biden certainly isn't but the people he surrounded himself with have a very simple approach to everything, they want to spend money they don’t have, they want to raise taxes on you. They’ve unleashed record inflation. This budget that Biden put out would create a $50 trillion national debt and their view is they can just keep printing money and unleashing inflation and keep borrowing money from China. It’s wildly irresponsible."  

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There you have it, Ted Cruz laying it out. Now, putting aside the actual authors of the Biden budget, you don't have to be a rocket scientist to understand that huge tax increases on corporations, individuals, capital gains – oh, and throw in Medicare tax hikes on wages and incomes and small businesses.  

In fact, let's not forget that small businesses under Biden’s tax hikes will be slammed and slaughtered all over the place. You don't have to be a rocket scientist to know that if you tax the primary sources of job creation and growth, you're going to get -- wait for it, hang on a minute -- less job creation and growth.  That is Arthur Laffer’s dictum. Art will be here in a few minutes. 

Biden hasn't the faintest idea about the incentive model of economic growth and prosperity. So, if you raise the corporate income tax from 21% to 28%, the biggest harm comes to typical working families who bear the burden. People pay taxes, not corporations and, by the way, we lose our international competitiveness.   

When you tax wealth and capital gains, then you're setting up tall barriers for capital investment, which is really the seed corn of the economy, isn't it? The negative impact of higher tax rates on saving, investments and entrepreneurship will do vast harm to the economy.   

Biden wants to punish success by redistributing income and wealth, but he doesn't understand the common-sense point of view that if it doesn't pay after tax, then you'll get less work and less investment.  If corporations are not profitable after tax, they're going lay off workers and wages and family incomes will fall. 

All this left-wing socialist stuff has been disproven a thousand times, but, with Biden, here we go again...and, by the way, his $5 trillion in so-called tax hikes, tax revenues, will never materialize.  

Between tax avoidance and the loss of economic incentives bringing down growth, he'd probably get no more than half of that $5 trillion in revenues, which blows up his whole phony deficit reduction argument.  

The real purpose of Bidenomics is to tax the rich in order to create a larger welfare state. By the way, a larger welfare state with no work requirements.  

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So, he wants an expanded child tax credit. That will cost $430 billion. He wants expanded earned income tax credit. That will cost $155 billion, $325 billion more in paid family and medical leave, $600 billion more in universal preschool, $200 billion more in secondary education, couple of hundred billion more in Obamacare subsidies, just to name a few, and as I said all of these social welfare benefit increases, no workfare.  

Now, his budget of course is dead on arrival this year, but stock markets look ahead and they know a few stray boats here and there in 2024 could give you another three-branch Democratic sweep. I sure hope not and I would bet against it, but you never know, do you?  

This article is adapted from Larry Kudlow’s opening commentary on the March 10, 2023, edition of "Kudlow."