A recession is the worst time to raise taxes, yet here we are again – fighting against a tax-and-spend agenda. Last week, new government data show what American families have been feeling for months now: we are officially in a recession. The U.S. economy shrank by .9 percent in the second quarter of the year, the second consecutive quarter of negative growth.
This alarming news should have put Democrats on notice, but unfortunately, we heard no real solutions from them to get our economy back on track. Instead, Senate Democrats announced a partisan backroom deal – developed by Senators Chuck Schumer (D-NY) and Joe Manchin (D-WV) with little input from members of their own party – to raise taxes on nearly every American.
The non-partisan Joint Committee on Taxation’s (JCT) analysis of the so-called Inflation Reduction Act found the deal would raise taxes on Americans earning less than $200,000 by $16.7 billion. Further, the JCT says 25 percent of Democrats’ tax hikes would be shouldered by workers through slashed wages. This comes at a time when real wage growth is down over 4 percent because of the highest rate of inflation in four decades. Inflation has cost the average American worker $3,400 in annual income, yet Democrats continue to advocate for policies that would drive inflation even higher.
In fact, analysis by UPenn Wharton, Senator Manchin’s favored budgetary model, projected the Schumer- Manchin deal would increase inflation through 2024. This proposal is the exact opposite of what we should be doing to help American families navigate these uncertain times.
The reason this bill increases inflation in the near term is quite simple: it drastically increases spending in its first few years while spreading its tax increases across ten or more years. At the same time, any inflation benefits in the second half of the next decade may not happen if Democrats attempt to extend many of the bill’s short-term policies, which they limited in length solely to hide the true spending and inflation impacts of the bill.
This deal is so bad it’s hard to choose the worst parts, but here are some highlights: $80 billion in funding for the Internal Revenue Service (IRS). Out of this $80 billion, more than half would go toward IRS enforcement to ramp up audits instead of investing in the customer service improvements the agency desperately needs. It also includes a 15 percent corporate minimum tax which heavily targets the manufacturing, energy, and transportation industries – meaning families will pay even more on everything from gas to utilities to consumer goods.
That’s not all. It bails out Obamacare on the backs of taxpayers; paves the way for cures-killing government price setting in Medicare; and puts the demands Big Labor over American energy dominance. It’s no wonder this deal was written in secret.
Last week I partnered with Representatives Jodey Arrington (R-TX) and Michelle Fischbach (R-MN) on a letter to Senator Schumer raising concerns with the proposed taxes in Democrats’ latest version of ‘Build Back Better.’ The letter was signed by over 50 House Republicans.
For 18 months Democrats have tried time and time again to roll back and undermine the success of the Tax Cuts and Jobs Act. Meanwhile, Republicans are looking ahead with proposals to provide families with permanent tax relief to allow you to keep more of your hardearned dollars; empower parents with increased options for their children’s education; and reinvest in the American economy and strengthen our supply chains through permanent research and capital investment incentives. We shouldn’t wait a generation to further simplify the tax code, and we shouldn’t raise taxes on families in a recession.
Americans everywhere deserve an economy that’s strong. Together, we will rebuild everything President Biden has broken, but first we must stop the latest attempt to force through the administration’s so-called “Build Back Better” agenda.
- Rep. Adrian Smith