The Democrats’ most recent reckless tax
and spending spree suffers from a serious case of policy whiplash. Just last
week, all but one Democrat voted to provide nearly $80 billion in subsidies to
some of the largest and most profitable corporations in the world.
The goal then was to make America a more
favorable business environment to attract investments from a critical industry.
But, mere hours later, they unveiled a huge tax hike on domestic manufacturing.
Democrats have tried to justify this
180-degree policy turn by claiming their tax hike is necessary to make
corporations “pay their fair share.” However, this claim is laughable given the
so-called CHIPS plus bill nearly all Democrats enthusiastically supported last
week.
As I pointed out at the time, the CHIPS
plus bill ensures many large, very profitable semiconductor manufacturers will
pay zero tax, or even receive a payment from the IRS exceeding any tax
liability. Yet, Senator Sanders was the only Democrat to express any concerns
about these profitable companies paying nothing in taxes.
Under the Democrats so-called book minimum
tax, large profitable corporations favored by Democrats can still escape paying
any federal income tax While they claim their reckless tax and spending
bill will ensure companies pay theoir fair share, they include carve outs and
expanded subsidies for their favorite industries.
For example, business tax credits are carved-out
from Democrats’ book minimum tax, including a myriad of souped-up green energy
tax breaks. This is despite the fact that research by the liberal Institute on
Taxation and Economic Policy confirms these credits are a significant reason
why seemingly profitable companies pay little or no tax.
The Democrats’ bill not only carves-out
certain tax credits – it doubles down with $270 billion in corporate tax
subsidies in the name of their Green New Deal agenda. Along with a new
provision that allows green energy developers to sell their credits to others,
a host of businesses and industries will be able to use this new loophole to
pay little or no tax. This could include financial institutions, private equity
firms, tech firms, and wealthy private investors.
Democrats’
message to the business community is clear. If you are a large, Democrat-aligned
green industry, you have nothing to worry about. Paying your “fair share” of
taxes is optional. But, if you’re a domestic textile or electronics
manufacturer, prepare to be taxed into submission.
This mindset is especially concerning
given our increasingly fragile economy. Late last week, we learned our economy
contracted for a second straight quarter – indicating we are in a recession.
The last thing businesses and families
need right now are tax hikes and a rash of poorly vetted policies creating even
more confusion and uncertainty in the economy. Non-partisan analyses by the Joint
Committee on Taxation and outside groups show that is exactly what Democrats
are offering.
During the election, Democrat promised not
to raise taxes on anyone earning less than $400,000. But JCT confirms their
proposal does exactly the opposite. For 2023 alone, Democrats propose a $17
billion tax hike on families and individuals making less than $200,000.
While Democrat tax
hikes hit Americans of all incomes, their proposed benefits are targeted at a
privileged few – like helping wealthy Americans purchase an $80,000 electric
SUV.
According to JCT, the original version of
their bill had a whopping $155 billion tax hike on domestic manufacturing stemming
from their so-called book minimum tax. The National Association of
Manufacturers estimated this tax hike would cost more than 200,000 jobs, reduce
labor income by $17 billion, and reduce GDP by nearly $70 billion.
I understand Senator Sinema has since
secured changes to the book minimum tax that may lessen its burden on domestic
manufacturing. However, even if we assume all the relief secured by Sinema
accrues to manufactures, the best-case scenario is manufactures would still see
$100 billion-plus tax hit.
Democrats Inflation Act still throws blue-collar
workers overboard for their Green New Deal. The Democrats’ war on manufacturing
is mind-boggling.
Members of both parties have stressed a
need to re-shore manufacturing to address supply chain disruptions and de-link
from China for national security reasons. Saddling manufactures with a giant
new tax bill will hurt – not help – our efforts. Targeting manufacturers for
tax hikes makes even less sense in the face of surging inflation.
Democrat tax hikes will curtail
investments necessary to increase the supply of goods needed to meet consumer
demand. This mismatch between supply and demand is what is driving inflation.
The potential harm to our economy is
underscored by Penn Wharton’s analysis of Democrats’ reckless tax and spending
spree. They called out the novelty and uncertainty surrounding Democrats’ book
minimum tax - saying more work is needed to understand its “impact on capital
market efficiency and the economy.”
Penn Wharton’s analysis also shows
Democrats proposals will do nothing to bring down inflation and is more likely
to make inflation worse in the near term. Essentially, Democrats are gambling on
untested and unproven policies while our economy is in a recession, real wages are
falling, and inflation is soaring.
The truth is Democrat’s reckless tax and
spending spree is bad for jobs, bad for the economy, and won’t do anything to
address what Iowans care about most - the rising cost of everything.
I urge my Democrat colleagues - rethink
your approach! Stop gambling with our nation’s economy!
