Appearing during a Ways and Means Republican meeting on President Biden’s Recovery-Killing Tax Grab, American Action Forum’s Douglas Holtz-Eakin provided a breakdown of President Biden’s harmful tax policies. Here are quick takeaways from his remarks, which you can watch here.
Assuming the strongest possible economic growth for infrastructure, President Biden’s plan is STILL a recipe for stagnation and decline. If Democrats get their way:
- The economy will shrink by 2 percent
- Investment in the U.S. will shrink by about 5 percent
- Capital will flow out of the United States
- Real wages will go flat
This is based on a forthcoming study previewed by Holtz-Eakin using President Biden’s assumptions at face value, including raising $3.3 trillion in taxes, spending $3.3 trillion on infrastructure and R&D, and assuming the best, meaning the highest impacts, of R&D and infrastructure and productivity. The study was done based on the same model as how the Joint Committee on Taxation would analyze the macroeconomic impacts of a tax bill, with the infrastructure pieces taken directly from the Congressional Budget Office.
Democrats’ tax increases won’t be restricted to the rich. Biden tax proposals will:
- Harm growth in wealth and investment
- Harm innovation
- Harm growth in productivity and real wages
Biden’s tax policy is the opposite of the tax reform begun in 2017. This is going to be damaging tax policy.
- An enormous tax hike: This is a tax increase taken at face value of $3.3 trillion dollars over the next 10 years, including:
- Sharp increases in the corporate rate at 28 percent
- A global minimum tax of 21 percent
- A phase-out of the business deduction for small businesses and pass-through entities
- Raises the tax rates on investment income to ordinary income for some high-income individuals
- Creates a new Death Tax
- Raises the top rate which would include older workers near retirement age, to 39.6 percent
- Applies to Social Security tax to labor income above $400,000
The people who ultimately lose are working Americans who will find even working full time, they make less.
- This is the last thing that the United States should want to do, particularly coming out of the sharp recession that we just experienced.
There is no evidence for Democrats’ claims that tax hikes will pay for themselves.
- There is no evidence in the productivity literature that infrastructure is so good that it will outweigh tax impacts.
- It’s very hard to raise national productivity in a significant way with infrastructure.
Democrats’ have already lost credibility on being fiscally responsible given their recently passed $1.9 trillion bill.
- The American Rescue Plan is an enormous debt increase with temporary provisions that Democrats seek to make permanent, resulting in $2-$3 trillion in structural deficits over the next 10 years.
Reprinted with Permission from US Committee on Ways and Means
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