My overall take on the reconciliation information coming out of the House is simple: Go woke, go broke, and this whole reckless tax and spend and regulate plan will inflict great damage on the blue collar, middle-class workforce, jobs, wages, and prosperity. Great damage.
I love it today when Secretary Blinken blamed President Trumpís conditional Afghan withdrawal plan for the catastrophe executed by the Biden administration. Love that. Let me get this right ó they were absolutely bound and hand-cuffed to Mr. Trumpís plans.
Yet wait a minute, the Democrats have religiously, obsessively, derangedly overturned every Trump policy. They overturned his tax cuts, his regulatory reduction, his energy independence, his support for Israel, his Iranian hostility, his border policies on security and immigration, his policies towards police, recidivist crime, among other things.
Are we supposed to believe that Mr. Bidenís Trump Derangement Syndrome forced him to follow Mr. Trump's Afghan withdrawal policies? Which, by the way, were conditioned and gated in a number of areas that were never fulfilled. The former president himself said he would have taken fierce combat action against the terrorist Taliban if they acted out as they did in breaking his deal during the Biden evacuation.
Coming back to all the tax policy problems, one of the most amusing aspects coming out of Ways and Means is that the sum total of revenues is estimated to be $2.9 trillion. Then the document states that combined with dynamic growth estimates by the White House, of an extra $600 billion, will fully offset the $3.5 trillion reconciliation spending package.
So let me get this right . . . a $2.9 trillion tax hike across the board on every category of producer, investor, worker, every category, is going to increase growth? Really? Naughty naughty. They're off the Laffer curve. Yet all I ask on this one, is a textbook reference that says jacking up taxes by record amounts will boost growth.
I donít care if itís a supply side textbook, a demand side textbook, a Keynesian textbook, a neoliberal textbook, a Marxist textbook, or the Book of Revelation. Just show me a book that says major tax hikes will promote economic growth. Iím just saying. Find me some intellectual support for this view.
Focusing more narrowly on these tax proposals,
I predict that the hardest hit area is going to be small business, the heartbeat of America.
ďA small business owner with $500K of income,Ē my pal Dan Clifton writes today, ďwill see their income tax rate increase, the amount of income subject to that tax rate increase, have a new 3.8% surtax, and lose a 20% deduction. The business owner could be looking at a 46-48% income tax rate before even considering payroll taxes and state and local taxes.Ē
I don't know what it is about Democrats that makes them want to vent their spleens and punish small business people. Maybe Joe Biden or the Ways and Means chairman, Richard Neal, once had their dog run over by a small business person and have never forgiven them. I mean I canít think of a reason why of all the economic constituents out there they want to punish small businesses the most.
Now big business gets hit, too. The corporate rate jumps to 26.5% from 21%, add on 4% for state average, and youíre looking at above 30% ó probably still at the top of OECD developed countries. Capital gains tax would go up to 25% from 20%, plus ó of course ó the 3.8% Obamacare surtax. The top individual income tax goes to 39.6% plus a 3% surtax on income over $5 million.
Plus limited deductions for highly compensated executives. Plus some whacks at estate and taxes on gifts to grants or trusts. Plus, of course, tax hikes on corporate international income.
The gory totals are roughly a trillion dollars in tax increases on individuals, $900 billion on business, $700 billion on drug companies, and $120 billion on IRS enforcement. This is preliminary stuff. The Senate Finance Committee has to weigh in. So will the white house.
Basically, almost all people who work in business will be paying a combined tax rate above 50%. Quoting from numerous studies ó such as the Congressional Budget Office, the Joint Committee on Taxation, and the Tax Foundation ó one can say that the biggest burden of corporate tax hikes will fall on middle income earners and blue collar workers.
Profits will fall. That means less money for wage increases. Less money to hire. Less money to invest in new plants and equipment and technology that would make the workforce highly productive. None of that will be possible with business tax hikes.
Then there are Americaís drug companies. They worked in partnership with the federal government, President Trumpís Operation Warp Speed, to develop a covid vaccination in six months instead of ten years, literally saving the country amidst the worst pandemic in 100 years.
The Democratsí reward for the drug companiesí ingenuity and patriotism is to jack up their taxes, clamp down on price controls, and force them to pay additional Medicare rebates and abide by socialist European price controls. Thatís the way the Democrats say thanks to our pharmaceutical and biotech innovators.
Apart from the tax committee, the Democratic House is hatching immigration policies that would provide amnesty to dreamers, so-called essential pandemic jobs with an eligibility starting date that could permit a million illegals who have crossed over this year to claim a path to citizenship. This doesn't belong in reconciliation. We surely need immigration reform but thatís a separate issue from the budget.
Iím also reading that any part of the economy, including the over $500 billion of global warming Green New Deal electric car and renewable fuel subsidies, any business receiving any of those monies must have a union shop by law. I noticed already that Toyota and Honda, two huge built in America carmakers, are protesting this. As they should.
So Iíll leave you with this question: Is it possible that some common sense could prevail to defeat this economic monstrosity? Is it possible?
From Mr. Kudlowís broadcast on Fox News.