A leading liberal think tank analysis shows the Biden overall tax plan would shred the president’s 2020 campaign pledge that taxes would not be increased “by one thin dime” for anyone making less than $400,000 a year.
According to the Tax Policy Center, if Biden’s combined tax initiatives became law this year, 75 percent of middle-class families would see the amount they pay in taxes increase in 2022, and that 95 percent of middle-class families would pay more in taxes by 2031. At the same time, Biden Treasury Secretary Janet Yellin is refusing to rule out the restoration of special interest tax breaks that would disproportionately benefit the ultra-wealthy.
Testifying recently before the House Committee on Ways & Means, Yellin refused to say whether the president and his advisers would move ahead on demands by Democratic governors like Andrew Cuomo (NY) and Phil Murphy (NJ) and members of Congress from the blue states that state and local tax payments be made fully deductible on federal returns once again. The provision known as SALT was capped from the tax code in the 2017 Tax Cuts and Jobs Acts as a “pay for” that made it possible for other rates to be reduced.
When asked whether Biden would support eliminating the cap if it was included in any compromise infrastructure package. Yellen said, “I’m not going to negotiate here on behalf of the president.”
Biden policies, some lawmakers say, are forestalling the onset of a full-blown recovery caused by the pandemic-related lockdowns that plunged the U.S. closer to financial disaster than at any time since the so-called great recession of 2008.
“Through the first five months of this year, the Biden Administration added 500,000 fewer jobs than the last five months of 2020 – some of which were during the height of Covid cases and deaths. A half-million jobs short. And due to inflation, real wages have declined since President Biden took office,” Brady said in a statement.
The White House has repeatedly denied this is because the enhanced unemployment benefits authorized at the beginning of the lockdown period have been allowed to continue. A study recently published by the Committee to Unleash Prosperity’s Steve Moore, Casey Mulligan, and E.J. Antoni shows the relationship between the two to be direct and economically harmful, a view shared by Federal Reserve Chairman Jerome Powell who has made clear he believes these benefits have discouraged workers from returning to work and harmed recovery.
While Biden policies may be cooling job growth here at home, they’d incentivize job creation and fuel an expansion overseas – especially if the president’s agreed-upon among the G-7 plan for a global minimum corporate tax is eventually adopted.
The 15 percent GMT, which must be approved by Congress before becoming law, would make it better to be a foreign worker or company than an American one. If it’s imposed, it would incentivize U.S. companies to move U.S. jobs overseas and to “offshore” themselves which, before the 2017 Tax Cuts and Jobs Act’s creation of a global intangible low tax income provision was a common occurrence in the American market.
The proposal the Biden administration has endorsed holds out the prospect of a global tax code in which American companies operating overseas have to pay higher taxes than their foreign competitors. This would give foreign competitors an advantage to target American companies and jobs and erode the U.S. tax base. As Brady described it, The White House is “leading a global race to the bottom” for America’s competitiveness and our workers.
Infrastructure projects that are paid for by users, not by federal taxes, can be a big boost to the economy.
With President Joe Biden looking to pass a major infrastructure bill and other policy priorities, the growing question is how he will pay for them. While some Republican senators have signaled some interest in cutting bipartisan deals, both sides should be focusing on budget cuts and reprioritizing existing revenues. They must avoid tax increases that could undercut the economic recovery as the number of vaccinated Americans grows and we hopefully emerge from the COVID-19 pandemic.
President Biden has called for upping the corporate tax rate from 21 percent to 28 percent. While that’s still lower than the country’s corporate tax rate prior to the 2017 tax cut bill, which was then 35 percent, it’s a bad idea. At 28 percent, the federal corporate tax rate, combined with state corporate taxes, would be over 32 percent, putting the U.S. back to having the highest corporate tax among the highly-developed OECD, Organization for Economic Co-operation and Development, nations. For example, Canada’s corporate tax rate is 15 percent and Mexico’s is 30 percent. One outcome of Biden’s proposed tax hike would be more corporations looking to move out of the U.S. to lower-tax countries.
Decades of research also show higher corporate tax rates get passed on to workers, who end up paying the majority of the costs in the form of lower pay and benefits. The Tax Foundation estimates Biden’s corporate tax increase would eliminate 159,000 jobs, reduce long-run economic output by 0.8 percent and wages by 0.7 percent, with the bottom 20 percent of earners on average seeing a 1.45 percent drop in after-tax income in the long term.
Biden also wants to raise taxes on the wealthiest Americans. “Anybody making more than $400,000 will see a small to a significant tax increase,” Biden recently said to ABC.
Raising taxes on the wealthy consistently polls well with voters of both major political parties, but it’s a bad policy that doesn’t work as intended. An analysis in the Quarterly Journal of Economics of decades of data shows that tax increases on individual incomes reduce average incomes and economic activity, but the effect is the fastest and largest when taxing the top one percent. The so-called 1990 luxury tax, for example, killed so many jobs that the federal government actually lost revenue because of it. That is because the rich do not sit on mountains of gold in their vaults, as some might imagine. Most of their money is either invested or spent so raising taxes on the rich lowers consumption and all the jobs that creates, and lowers investment and all the jobs that creates. Hence, the top one percent pay considerably more in income taxes than the bottom 90 percent of taxpayers combined.
The country is expecting significant economic growth this year as more Americans are vaccinated and able to travel to visit loved ones, go on vacations, eat in restaurants and attend things like sporting events. Tax increases would undercut this growth by taking money that would be invested in expanding existing businesses or opening new ones.
President Biden and Republicans need to show some seriousness about dealing with the nation’s debt and deficits. In the debate leading up to the recent $1.9 trillion spending bill — which came after President Trump’s own $2.2 trillion stimulus bill and four years running up debt and deficits — the GOP could not credibly claim it cared about debt and deficits. Republicans and conservatives “ditched any semblance of fiscal restraint during the last four years of economic expansion (i.e., precisely when it’s easiest to cut spending),” Scott Lincicome recently noted in his newsletter for The Dispatch.
Spending cuts are needed and the country’s massive defense spending, over $700 billion a year, is ripe for cutting. A group of House Democrats is urging Biden to trim the Pentagon’s budget. Unfortunately, Republicans want more, not less, spending. “The problem with decreased or flat defense budgets is that our adversaries aren’t looking at cutting defense spending. It’s the opposite,” Rep. Mike Rogers, the leading Republican on the House Armed Services Committee, claimed.
As a military veteran I’d argue he is wrong because our current military is more than capable of defending our nation and, if we stopped our absurd and broken attempts at nation-building overseas, our defense budget is more than adequate already.
If Republicans aren’t going to support ending our forever wars and reducing defense spending, they should at least try to ensure that any big infrastructure and spending bills embrace the user-pays principle and utilize public-private partnerships. Raising the federal gas tax is counterproductive — as vehicles become more fuel-efficient — and politically unpopular, but private companies and private equity firms are ready to invest billions in major infrastructure projects. From water and sewer systems to roads and bridges, infrastructure can be built via public-private partnerships using private capital and charging user direct fees to pay for it.
Users don’t pay any more than they would’ve otherwise, the projects get built faster, private investors take most of the financial risks of losses if something goes wrong with the project, such as delays and cost overruns, and the companies can make a profit if they deliver the project efficiently.
Infrastructure projects that are paid for by users, not by federal taxes, can be a big boost to the economy. Combining this approach with some smart realignment of other federal spending would allow President Biden to achieve his policy goals without the harmful tax cuts he is considering and the consequent blow to the economy and to lower-income workers.
1,000,000 new jobs. You’d think you’d hear a lot about such an impressive number. So far, it’s made little splash in the media. Nonetheless, since the Republican tax cuts were signed into the law the U.S. economy has created one million new jobs. And that’s just the beginning of the good news.
In May 2018 alone, defying the expectations of many economists, 223,000 jobs were created. The unemployment rate has dropped to 3.8 percent, its lowest point since April 2000. Unemployment among black people and Hispanics is at the lowest point since the numbers were first broken out by race during the Nixon Administration.
The American economy is surging, even before the new, lower corporate and personal tax rates go into effect. The promise that companies and most individuals will soon be able to keep more of what they earn has, alongside the Trump Administration’s successful effort to deregulate vital sectors of the economy, Continue reading
The economy is booming. Even the New York Times, no fan of the president, decided that “splendid” and “excellent” were appropriate adjectives to describe Friday’s jobs report from the Bureau of Labor Statistics.
These showed the nationwide unemployment rate falling to 3.8 percent. If it improves yet further, it will hit lows not seen since the 1960s. The unemployment rate among black people fell to 5.9 percent, an all-time low, which makes one wonder how many African-American voters might think twice about voting against the incumbent Republicans in the midterm elections. The Hispanic or Latino unemployment rate ticked up a tenth of a point, but remains below 5 percent. Before President Trump took office, that stat could only be said of one month since the statistics bureau began tracking it in the 1970s.
The good news is not confined to the fact that there is an abundance of jobs. Wages are rising, too. For the first time Continue reading
By Maireid Mcardle • National Review
The American economy finished stronger than expected in May, according to the Labor Department’s jobs report, released on Friday.
The unemployment rate was expected to remain steady but dropped a tenth of a point to 3.8 percent, the lowest since April 2000.
The U.S. added 223,000 non-farm jobs in May, beating the estimate of about 188,000.
Even the underemployment rate, including discouraged workers and those with part-time positions who would Continue reading
A record-setting stock market is just one of the big effects Trump's policies are having.
By US News•
The supposedly smart people said Donald Trump would destroy the U.S. economy if he were elected president.
They were wrong. On Thursday, the Dow broke 25,000 for the first time in its history – a meaningful expression of investor confidence in the future. Trump’s policies of deregulation, which have been moving ahead at full steam even before the tax cut bill passed just before Christmas, have helped push the stock market up by a third which, economist Arthur Laffer estimates, works about to about a $6 trillion increase in the nation’s net wealth.
That may not be historic – there may be periods in which wealth has increased at a faster rate – but it sure is impressive. Especially since the same smart people who’ve been telling us Trump would wreck the economy spent the Obama years explaining annual growth at less than 3 percent (and likely closer to 2) was the new normal.
It’s still a little early to proclaim “happy days are here again” but, as the Magic 8 Ball puts it, “all signs point to ‘Yes'” as far as whether there will be a period of protracted economic growth. That Continue reading
Hillary Clinton vowed to create 200,000 new jobs in Upstate New York during her time as a senator representing the state, but a new report published Monday found that the Democratic nominee’s efforts fell far below projections.
While upstate jobs rose 0.2 percent overall during Clinton’s tenure in the Senate, manufacturing jobs fell nearly 25 percent, the Washington Post reported, citing data from the Bureau of Labor Statistics (BLS).
Analysis of Clinton’s first Senate term revealed that Upstate New York actually lost jobs. The Public Policy Institute in Albany studied BLS data and found that between October 2001 and December 2006, Upstate New York lost more than 31,000 payroll jobs.
The Clinton campaign did not comment on how man jobs were created during Clinton’s tenure but directed the Washington Post to statistics from the New York State Department of Labor showing that Upstate New York had gained 117,000 jobs during the former first lady’s first term. The Post reported it was unable to confirm the number, saying that the state agency doesn’t “use Upstate New York as a specific regional area to measure employment.”
Clinton was reelected for her second term in November 2006 before leaving the Senate in January 2009 to become secretary of state.
The Washington Post reported:
The former first lady was unable to pass the big-ticket legislation she introduced to benefit the upstate economy. She turned to smaller-scale projects, but some of those fell flat after initial glowing headlines … Many promised jobs never materialized and others migrated to other states as she turned to her first presidential run, said former officials who worked with her in New York … In March 2001, she introduced seven bills to stimulate the upstate economy–“part of a larger partnership to spur job creation across our country,’’ Clinton said. None of the measures passed, records show.
Clinton has promised repeatedly on the campaign trail that she would “make the biggest investment in new, good-paying jobs since World War II.”
The new report from the Post could cast a shadow over the Clinton campaign’s focus on her time in the Senate, when she vowed to revive a depressed Upstate New York.
Say jobs, economy not recovering as quickly as unemployment rate might suggest
by Ali Meyer • Washington Free Beacon
While the Federal Reserve claims that the United States is making progress towards its goal of maximum employment, some economists and policy experts disagree, citing poor labor participation rates and anemic wage growth to suggest that the economy is not recovering as quickly as the unemployment rate might suggest.
Fifty-six percent of economists polled by the Wall Street Journal, said that the United States would meet the Fed’s goal of “full employment” by 2016. In July, the Federal Open Market Committee said that there had been “cumulative progress” made toward this goal.
The Fed has maintained that it will not raise interest rates until the labor force reaches maximum employment and inflation hits 2 percent. Continue reading
We’ve lived through this over and over during the Obama presidency. Every time we see a hopeful sign that the economy’s shifting into a higher gear (a bullish 3.9% GDP growth in the second quarter, for example, after a near-recessionary 0.6% in the first), hiring slips back again into its slow-growth ditch.
No wonder voters are seething with anger. Continue reading
by Jeff Cox • CNBC
The revelation, contained in a new survey Wednesday showing how much work needs to be done yet in the U.S. labor market, comes as the labor force participation rate remains mired near 37-year lows.
A tight jobs market, the skills gap between what employers want and what prospective employees have to offer, and a benefits program that, while curtailed from its recession level, still remains obliging have combined to keep workers on the sidelines, according to a Harris poll of 1,553 working-age Americans conducted for Express Employment Professionals. Continue reading
by Peter Morici • FoxNews
The U.S. economy created only 142,000 jobs in August, down from 212,000 in July, indicating the economy significantly slowed this summer.
Job creation is well below the pace needed to reemploy all the workers displaced during the financial crisis—the economy is in crisis!
Although official GDP estimates indicate the economy expanded in the second quarter at a torrid pace—4.2. percent—much of that was inventory build, as consumer spending continued to drag along at a nonplus pace and capital investment, especially in manufacturing, remains subpar.
The official jobless rate is down to 6.1 percent but real unemployment is closer to 18 percent, because so many prime aged adults are sitting out the party.
by Mark Schultz & Adam Mossoff • TechPolicyDaily.com
A handful of increasingly noisy critics of intellectual property (IP) have emerged within free market organizations. Both the emergence and vehemence of this group has surprised most observers, since free market advocates generally support property rights. It’s true that there has long been a strain of IP skepticism among some libertarian intellectuals. However, the surprised observer would be correct to think that the latest critique is something new. In our experience, most free market advocates see the benefit and importance of protecting the property rights of all who perform productive labor – whether the results are tangible or intangible.
How do the claims of this emerging critique stand up? We have had occasion to examine the arguments of free market IP skeptics before. (For example, see here, here, here.) So far, we have largely found their claims wanting. Continue reading
It appears increasingly clear that the proposed Keystone XL oil sands pipeline project is being studied to death as President Obama dithers over whether to approve it. The massive project to move Canadian oil to American refineries should already be under construction, but the president can’t decide whether to pander to Big Green environmentalists who rabidly oppose it or to the trade unions who want to build it and benefit from the thousands of jobs that it would create. So he keeps moving the goal posts, from one study to the next, desperate to avoid responsibility for the final decision.
The latest study, released Jan. 31 by the State Department, found that the pipeline would not significantly increase greenhouse gas emissions, confirming the results of a draft version that was released in March 2013. That conclusion should put to rest Obama’s professed concern that the pipeline would add to the problem of greenhouse gases. Other studies have concluded that not approving Keystone XL could do more environmental damage because Canada will sell its oil to China. The Asian giant’s environmental standards fall far short of America’s. Continue reading
Then Speaker of the House Nancy Pelosi said at the time of the passage of the Affordable Care Act (aka ObamaCare) that we had to pass it to find out what’s in it. At that time many public policy experts, myself included, warned that ObamaCare would be add to the deficit and national debt, that it would destroy jobs, that many Americans wouldn’t be able to keep their doctor or their insurance plan, that it would reduce incentives to work and that it would needlessly harm the overall quality of healthcare. The most recent CBO report substantiates our warnings and it proves the folly of heeding Pelosi’s advice to pass the bill to find out what’s in it. Next time, read the bill. Each of its harmful impacts was entirely predictable to anyone who read it.
by Sean Davis
The nonpartisan Congressional Budget Office (CBO) just released its latest analysis of the country’s economic and budget outlook, and it’s a doozy. (Remember, this is the same CBO that the President quoted extensively when he thought it suited his purposes.) If you’re a Denver Broncos fan who watched in horror as your team disintegrated during the Super Bowl on Sunday, then you’ll have some idea of how Obamacare’s proponents will feel as they read this report.
Yes, it’s that bad. Continue reading
Income Inequality talk is not about helping the poor, its about trying to cling to power. Sadly, the American dream is in trouble precisely because of policies designed to win make career politicians, but not help grow the economy or increase opportunity.
by David A. Keene
President Obama has all but announced that this fall’s House and Senate campaigns should focus not on the collapse of American influence abroad, or on the continuing disaster that we know as Obamacare, or even on the apparent inability of his policies to create jobs, but on “income inequality.”
The mantra from the administration, like the rantings of the “Occupy” crowd and the new finger-pointing quasi-Marxist mayor of New York City, is that in today’s United States, it is impossible to get ahead unless one is born rich, works on Wall Street or finds some other way to profit from the misery of others.
Their rhetoric and proposed policies play on envy and remind one of the class warfare that has dominate European politics for so long. Continue reading