By Rep. Jason Smith
During the 2007-2009 recession, Senator Chuck Schumer, in a rare moment of candor, argued against raising taxes, saying: “You don’t want to take money out of the economy when the economy is shrinking.” In 2010, during his first campaign for the U.S. Senate, then-Governor Joe Manchin did not mince words either: “I don’t think during a recession you mess with any of the taxes or increase any taxes.”
They were right. Unfortunately, it seems they have developed a bad case of amnesia.
Today, America is in another recession. Since President Joe Biden took office 18 months ago, inflation has risen 13.8 percent, real wages have dropped 5.1 percent, and the economy has shrunk for two consecutive quarters. Within just the past 6 months, 75 percent of Americans have experienced financial hardship because of inflation, and this year alone Americans will pay a $5,900 inflation tax on goods and services. It is obvious that adding new taxes would harm an already weakened economy and stretch family budgets to the breaking point. What Congress should be focused on is promoting pro-growth policies that will raise wages, lower prices, and ultimately lift the economy out of recession.
And yet, just as America is spiraling into recession, Senators Schumer and Manchin have introduced a 700+ page budget reconciliation bill that – you guessed it – raises taxes on American businesses and families. Washington Democrats first tried spending their way out of inflation; it seems they are now trying to tax their way out of a recession. You do not need a PhD in economics to understand that this is a recipe for disaster.
The Democrats’ bill creates a new 15 percent minimum tax on businesses. The largest portion of the burden of this new tax would fall on American manufacturers, and by extension, their employees and customers. Instead of encouraging businesses to hire workers, add shifts, or expand facilities to restock bare store shelves, like Republicans did with the Tax Cuts and Jobs Act, this bill will extend the supply chain crisis and force businesses to lay off workers.
For his part, President Biden campaigned just two years ago on the promise not to raise taxes on those making less than $400,000. The Joint Committee on Taxation (JCT), Congress’ tax scorekeeper, found at least half of the new tax burden from the Democrats latest reconciliation bill will be borne by Americans making less than $400,000, with billions worth of new taxes falling on those earning less than $200,000.
To ensure that middle-class Americans pay up, this bill funnels $80 billion to the IRS, over half of which goes directly to hire an army of agents to target working families, farmers, small businesses, and gig workers, even though the agency struggles to provide basic services, like answering the phone. In the original version of this budget reconciliation bill passed by House Democrats last year, they greenlit the hiring of 87,000 new IRS agents – enough to fill Missouri’s Arrowhead stadium – to snoop into Americans’ bank accounts. According to JCT, up to 134 million taxpayers earning less than $400,000 would have their account information reported. Despite Democrats’ rhetoric, beefing up the IRS will not go after wealthy Americans or corporations. Analysis shows the folks most likely to be targeted by the IRS are middle-income families.
The Democrats’ latest tax and spending scheme will do nothing to solve the growing laundry list of crises facing Americans: inflation, supply chain problems, a labor shortage, spiraling debt, and now, a recession. A recent poll shows that 59 percent of Americans believe the Washington Democrats’ bill will either increase inflation or will not change it. The American people are right, and if you wound back the clock a few years, Chuck Schumer and Joe Manchin would agree. Let’s hope the Democrats’ memory loss is short-lived, because when it comes to raising taxes during a recession, as we say in Missouri, “that dog won’t hunt.”
Read the full op-ed here.