Manchin Goes All-In On Tax Hike And Climate Spend
Senators Manchin and Schumer come to an 11th-hour deal.
By: Mark Angelides July 28, 2022
Liberty Nation News
In an abrupt about-face, West Virginia’s Senator Joe Manchin has reached an agreement with Senate Majority Leader Chuck Schumer (D-NY) on a spending package that they claim will lower health care costs, combat climate change, and reduce the federal deficit. Critics, however, say the proposal is little more than a tax hike on American businesses that will add even more inflationary pressure.
Manchin stated, “I now propose and will vote for the Inflation Reduction Act of 2022. Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in energy security and climate change solutions.”
Indeed, a bill with “inflation reduction” in its very name might set alarm bells ringing for the more fiscally conservative. After all, the estimated $433 billion in new spending has to come from somewhere.
Climate change $369 billion
Obamacare $64 billion
So, it seems that the majority of the freshly-printed cash will go to climate change programs and clean energy production, making it the largest such outlay in US history.
Also included is a three-year subsidies extension for the Affordable Care Act.
While the administration will tout this as an environmental victory in the lead-up to the November elections, American voters may not be as thrilled.
According to a July PBS/NPR poll, climate change did not make the list of priorities for voters of any party. Topping the survey was, of course, inflation.
To pay for the spending, Manchin and Schumer have agreed to establish a minimum 15% corporate tax, IRS enforcement, and other tax law changes, which they say will raise $739 billion over ten years in revenue.
Senate Minority Leader Mitch McConnell (R-KY) was quick to lash out at the package, tweeting:
“Democrats have already crushed American families with historic inflation. Now they want to pile on giant tax hikes that will hammer workers and kill many thousands of American jobs. First, they killed your family’s budget. Now they want to kill your job too.”
This sentiment was echoed strongly by Sen. Marsha Blackburn (R-TN), who simply wrote, “Build Back Broke is going to bankrupt America.”
Can It Pass?
Democrat leadership will try to pass the bill through reconciliation.
Budget reconciliation is a special parliamentary procedure of the United States Congress set up to expedite the passage of certain budgetary legislation in the United States Senate. The procedure overrides the filibuster rules in the Senate, which may otherwise require a 60-vote supermajority for the passage by the Senate.
So, with the help of Vice President Kamala Harris and her tie-breaking vote in the upper chamber, no bipartisan support is required.
However, this razor-thin majority also means that Democrats can’t afford to lose even one member of their caucus.
If it passes, the bill will doubtless be hailed by Team Biden and the media as a significant accomplishment, and a primary reason voters should cast a blue ballot in November.
And yet, according to almost every major poll, the issue of climate change does not even register.
The Washington Examiner
by Zachary Halaschak, Economics Reporter |
https://www.washingtonexaminer.com/policy/business/manchin-agrees-15-percent-corporate-minimum-tax
The Inflation Reduction Act of 2022 is supposedly a replacement for President Joe Biden’s ambitious, and expensive, $2.4 trillion spending bill, known as Build Back Better.
As I said earlier, the legislative proposal would levy a 15% minimum tax on the book income of companies.
The United States currently has a 21% corporate tax rate, which it assesses based on companies’ tax returns. The new proposal would assess a minimum 15% tax on the adjusted financial statement income of corporations — book income, something that Democrats estimate will raise $313 billion in new tax revenue.
“Tax fairness is vital to our nation’s economic future,” Manchin said. “It is wrong that some of America’s largest companies pay nothing in taxes while freely enjoying the benefits of our nation’s military security, infrastructure, and rule of law.
“It is common sense that a domestic corporate minimum tax of 15% be applied only to billion-dollar companies or larger, ensuring that America’s largest businesses are no longer able to operate for free in our economy,” he added.
Does anyone out there believe that large corporations won’t pass that tax on to their customers by cutting wages and increasing the price of their products?
Also included in the agreement was a plan to bolster IRS tax enforcement, which the Congressional Budget Office projects will net $124 billion in increased revenue.
Manchin stated. “Through the enforcement of a fair tax code, we can use the revenue to cut the deficit and lower the cost of healthcare for working families and small businesses.”
Bottom line, Biden’s Newest “Build Back Better” Boondoggle Would Worsen Inflationary Squeeze on Middle America
The Heritage Foundation
To avoid stoking the inflationary firestorm sweeping the country, Congress must reject this newest iteration of Build Back Better.
This version of Build Back Better could increase insurance costs for the vast majority of Americans by way of destructive price controls.
Today’s inflation is the result of Washington printing an incredible amount of money and adding $7 trillion to the national debt since the COVID-19 pandemic.
With inflation surging to 9.1% and averaging much higher in the rural heartland than in urban areas, now is not the time for the federal government to pour gasoline on the fire.
Yet, as Democrats negotiate the newest iteration of their socialist nightmare—the so-called Build Back Better Act—that is exactly what they are planning to do. This plan would increase inflationary pressures with shortage-inducing price controls on prescription drugs and an increase in spending for Obamacare subsidies.
If this sounds like the approach of the 1970s, it is—rapidly expanding federal spending and the money supply, and ultimately triggering double-digit inflation. Then, too, rather than rein in spending, Washington resorted to price controls.
The newest version of the euphemistically named Build Back Better follows this failed playbook.
In the 1970s, government price-meddling led to gasoline lines stretching for blocks. This time the price-meddling will make it harder for vulnerable Americans to get their hands on lifesaving drugs.
Inflation is too many dollars chasing too few goods and services, and this bill dumps in even more dollars, while chasing down and destroying even more economic production.
Price Controls to Oblivion
The legislation would impose a formula-driven price ceiling on certain prescription drugs sold in the Medicare market.
With statutory limitations on prices imposed, the “negotiations” between the government and the private companies that develop and produce lifesaving medicine would be about as one-sided as the Pittsburgh Steelers squaring off against a Pop Warner football team.
A company could either accept the government-dictated price or be cut off altogether from the large Medicare market.
If a business were to sell a price-controlled drug at higher than the “negotiated” price, it would face an effective tax rate of more than 100%.
So, the Government sets the price and could care less if the company makes a profit or not. Some companies will be forced out of business altogether or simply lay off workers and cut production, creating a shortage.
(Dialysis Clinic story)
No business can afford a 100% tax, but this tax isn’t about raising revenue or reducing the deficit. In fact, it’s designed to raise zero dollars of tax revenue. The point of the tax is to strong-arm businesses into doing what the government wants. Or else.
The price controls may look like spending cuts, but they would act like new business taxes. Whether businesses are taxed at 30% on sales or whether they’re forced to reduce prices by 30% makes no meaningful difference to them. The chilling effect on business activity and research and development would be the same.
These regulations would only make it harder to produce vital medicines, and they wouldn’t mitigate the true cost of producing such important products.
Instead, these costs would simply be shifted to other Americans—most likely, to the 82% of Americans not covered by Medicare who could see the largest cost increases.
This version of Build Back Better—theoretically intended to reduce the cost of insurance—could instead indirectly increase insurance costs for the vast majority of Americans by way of these destructive price controls.
However, we cannot know for sure how far-reaching these negative effects will be. They will show up as costs that slow down other sectors of the economy, that reduce wage levels, and that will mean some new businesses and research projects will never get started at all.
Hauntingly, we will never know how many millions of lives could have been saved or brought out of poverty by the innovative pursuits that these price controls will choke to death.
Whenever governments spend—as this plan would, on more Obamacare subsidies—they have three options to pay for it.
They can tax it, taking directly from hardworking Americans and destroying the delicate business arrangements that provide jobs and produce the things we use and need.
They can print it, devaluing your savings and the value of your paycheck by watering down the value of each dollar.
Finally, they can borrow the money, leaving debts for your children while draining the oxygen out of the economy today as the government squanders job-creating investment dollars to bloat itself.
When the government borrows, it does so with the promise to either tax someone or print even more money in the future to pay it back.
The certainty of the burden it will impose, and the uncertainly of how it will impose it, will cause economic chaos.
Governments can’t create value out of nothing. There are no free lunches here.
Spending more money to reduce inflation doesn’t pass the smell test.
Inflation is a hidden tax, but it’s still a tax, and no tax in history was ever reduced by the government spending more money. To reduce a tax, including inflation, the government must spend less.
Today’s inflation is the unavoidable result of Washington printing an incredible amount of money and adding $7 trillion to the national debt since the COVID-19 pandemic.
Rather than acknowledge this reality, congressional Democrats and the Biden administration have now spent more than a year obsessively trying to force through yet another massive spending package.
There was the fake “infrastructure” plan (supported, unfortunately, by 19 Republican senators), then Build Back Better, then a revised version of the latter packed with deceptive budget gimmicks, and now this newest plan.
Regardless of how many more mutations Build Back Better goes through, regardless how many times President Joe Biden renames and repackages it, it still suffers from the same fundamental flaw: It concentrates more money and power in Washington at the expense of the real economy.
It distorts the economy for the benefit of special interests, and it will lead to a combination of tax hikes, deficit spending, and inflation, now and well into the future, all to the detriment of hardworking families.
Instead of further antagonizing households, we should use deregulation and pro-growth tax reform to help the economy. This path would revitalize the nation and dust off the engines of the world’s most dynamic economy.
Or with this new Build Back Better, we can continue down the road to expanding government control, crushing businesses and jobs, and squeezing families trying to make ends meet.
Make no mistake, this will lead straight to a more painful and longer-lasting inflationary crisis.