$3 trillion tax hike the opposite of ‘good investment’
Before the pandemic, our economy had taken off thanks to the 2017 Tax Cuts and Jobs Act and to policies that supported hard work and entrepreneurship. Republicans in Congress focused our efforts on making sure that those who start a business on their kitchen table could work hard and take that company to Main Street. The result was the lowest unemployment in 50 years, with more people finding jobs in America than at any point in our history.
Compare that with the Democrats, who are rushing through Congress a 900-plus page tax bill with around $3 trillion in tax hikes and new loopholes. Instead of focusing on getting the economy going, Democrats have prioritized a grab bag of socialist policies called for in Sen. Bernie Sanders’ (I-Vt.) budget. One recent study from the Tax Foundation found that all of Biden’s proposed $6 trillion spending bills would shrink the economy by an entire percent over the next decade.
The New York Times promoted the enormous impact Democrats’ proposal would have on the country by saying it would “touch virtually every American, at every point in life, from conception to old age.” My colleagues across the aisle on the Ways and Means Committee have continually referred to their plan to expand government as a simple “good investment” for Americans. I disagree — it’s only good for creating inflation and for their special interest groups receiving special perks from the new programs that’ll be created.
Many in Washington today seem to think that just because a bill spends money makes it a good investment. But that’s not how it works. Washington, after all, has a lousy track record on making “good investments” with taxpayer dollars.
I fear that many small businesses, who have fought so hard to stay afloat while battling large companies that had an easier time bearing the burden of shutdowns, will ultimately fail under the tax and regulation regime of the Biden administration. That’s because of the combined effect of increasing the corporate tax rate to 26.5 percent, setting a global minimum tax rate at 15 percent, and increasing capital gains tax — all of which are included in the Biden administration’s tax plan – will create an effective tax rate up to 46.4% for some. This would cause many to shutter or be forced to relocate to other countries while severely curtailing investment in American startup companies.
The Joint Committee on Taxation found that two-thirds of Biden’s corporate tax hike will be felt by middle-income taxpayers, including the small businesses that file taxes as individuals. They also estimate it will lower federal revenues by around $1.2 trillion over the next decade. The Tax Cuts and Jobs Act in 2017 did the opposite by helping to create economic growth.
Democrats’ so-called “good investment” only gets worse when you dig more into the tax hikes and giveaways. Take the Green New Deal patronage programs within the bill that will make families across the U.S. pay more in taxes so that millionaires in California can write off a new Tesla.
The bill will push to federalize the failed climate mandates in California. Their plan is not based on reality. Right now, electric cars comprise less than 2 percent of the automotive market in the U.S. Billions in taxpayer subsidies will not change that. It’ll only crush small businesses in the name of another unrealistic slogan.
Ensuring that small businesses and families are on firm footing is what’s vital to our economic success as a nation. There are more than 30 million small businesses in the United States, which employ nearly half of all Americans. Supporting the economic engine of our country seems like it should be a priority for all lawmakers, regardless of party. Why aren’t Democrats doing anything to help them grow and expand their operations?
As we emerge from the pandemic, our focus needs to be on rebuilding the economy in a way we know works. This begins by removing hurdles to new business formation and implementing policies that allow our small businesses to grow. Instead, Democrats are doubling down on the radical expansion of government through Green New Deal policies, subsidized health care and a weaponized IRS. Make no mistake, this unprecedented expansion of Washington will come at the expense of working families and small businesses.
Ron Estes, one of only a handful of engineers in Congress, worked in the aerospace, energy and manufacturing sectors before representing Kansas’ 4th District since 2017. He serves on the House Committee on Ways and Means and Joint Economic Committee.