President Joe Biden is a one-trick tax-hike pony. While taking a stroll on a Delaware beach recently, Biden bragged about his plan to raise taxes on businesses and individuals. That’s right: tax increases as we face a likely recession.
Democrats are expected to present the tax increases to the Senate parliamentarian soon as they hope to rush a large tax-and-spend bill through before they take off for the August recess.
Biden and Democrat Senators Chuck Schumer and Joe Manchin assert that these tax hikes will only affect the big bad corporations who would supposedly just eat the cost. In reality, Americans know that if businesses incur increased costs -- such as an increase in the cost of raw materials or an increase in the cost of taxes -- they will pass these new costs onto their customers.
Corporate tax increases also reduce employee wage growth. A 2012 study shows that for every $1 in corporate tax increases, wages decrease by 92 cents.
In the Democrat bill, expect to see several corporate tax increases that will hurt American competitiveness. These tax increases will saddle U.S. employers with higher costs and greater complexity, and require businesses to hire even more lawyers. This is yet another cost that gets passed down to consumers and workers alike.
Democrats also want to yoke the U.S. to a “global minimum tax” pushed by elite Eurocrats. Biden wants us to join a cartel so nations cannot compete to attract companies with lower rates. Progressives loathe competition. This is a power play by global politicians to squeeze more money out of taxpayers.
This will also sacrifice our sovereignty, as other countries would have a say in American tax policy, which makes the Biden proposal distinctly un-American.
Inflation is already growing faster than wage growth, so Americans are losing money each year. The Democrat tax increases will only make this problem worse.
A 2020 analysis shows that 31% of corporate tax incidence falls onto the consumer. Even the left leaning Tax Policy Center has pegged the impact at 20%, still significantly more than the 0% that the Democratic Party claims.
In his budget, Biden proposed to raise the U.S. corporate tax rate to levels above those in communist China. This is a reckless act regardless of the state of the economy. Doing so as we face a recession is even worse.
Many prominent Democrats promised taxpayers they would never raise any taxes during a recession. Now they are on the verge of breaking their word.
Most important among these pledges is that of Joe Manchin, who said while campaigning for his seat in 2010, “I don’t think during a time of recession you mess with any of the taxes, or increase any taxes.”
Former President Barack Obama concurred. He said: “You don’t raise taxes in a recession. The last thing you want to do is to raise taxes in the middle of a recession.”
Schumer is also on the record opposing any tax increase during a recession: “If we’re in a recession and we’re in a difficult economic time, I don’t think Sen. Obama or anyone else is going to raise any taxes. You don’t want to take money out of the economy when the economy is shrinking,” he said on an October 2008 episode of CNBC’s Fast Money.
More recently, Sen. Kyrsten Sinema, just two months ago, emphatically stated:
“I will only support tax policies that promote growth and economic stability particularly during a time of coming through this pandemic, rising inflation, and what we think is a coming recession.
So I am unwilling to support any tax policies that would put a break on that type of economic growth, or stall business and personal growth for America’s industries.”
In case any of these influential Democrats are living under a rock -- which, by their recent actions, they may well be -- we are in a perilous economic time. Inflation is at a level not seen in 40 years. And 81% of Americans think we are already embroiled in a recession or will be in the coming three months.
The Democrats’ tax-and-spend habit has already caused enough damage. The Atlanta branch of the Federal Reserve currently projects GDPwill likely come in at negative 2.1 for the second quarter.
Instead of protecting Americans’ wallets, Democrats are pushing tax increases and spending increases which would only worsen inflation.
Raising corporate taxes has actual, tangible effects on American workers and consumers. Any corporate tax increase would hinder an economy already on the precipice of disaster.
Ben Susser is a Communications Associate at Americans for Tax Reform