OPINION:
Inflation is out of control in President Joe Biden’s economy, and the Democrat $5 trillion socialist tax-and-spend bill will make this problem worse. Thank goodness, Sen. Joe Manchin of West Virginia recognized this and said he was a no-vote on the bill.
In November, the consumer price index increased by 6.8% on an annualized basis, the fastest rate of inflation in nearly four decades.
When Mr. Biden took office in January, annual inflation was at just 1.4%, a rate that had been stable over the last decade. Today, inflation has increased nearly five-fold and is punishing American families and small businesses in the form of higher prices for goods and services.
The price of key goods has increased dramatically under Mr. Biden and the Democrat Congress. Gas prices have increased by 58%, total energy costs have increased by 33%. Beef and bacon have increased 21%, while furniture has risen by 12%.
The erosion of purchasing power is especially concerning, given that wage growth is failing to keep up. Real average hourly earnings decreased by 0.4% over the past month and have decreased by 1.9% over the past year. Americans are getting poorer thanks to Inflation.
While the cost of many products has increased, the cost of prescription drugs decreased by 0.3% and have been dropping since 2019, yet Democrats want to impose socialist price controls and a new 95% tax on medicines.
After months of downplaying the problem and calling inflation “transitory,” the White House claims its bill will make inflation better. In reality, the threatened legislation will make this worse through trillions in new tax hikes and wasteful spending.
The legislation calls for $800 billion in tax increases on American businesses, including a domestic 15% minimum tax on “book income” and several taxes on American energy, including an $8 billion home heating tax.
In addition, the legislation creates a 15% global minimum tax that will require American businesses to pay taxes on the Global Intangible Low-Taxed Income on a country-by-country basis rather than a worldwide basis. Under this system, they would have to calculate their taxes dozens or even hundreds of times, creating significant tax complexity and uncertainty for businesses operating overseas and making the U.S. less competitive than foreign rivals like China.
These tax increases will not be borne by corporations but will be passed along to working families, including Americans making less than $400,000 per year.
If that were not bad enough, Democrats want to use these taxes to finance almost $2 trillion in giveaways to left-wing special interests and to fund woke and wasteful spending programs.
The second-largest provision in the legislation is a plan to raise the cap on deducting high state and local taxes, a plan that will be a giveaway to the wealthy in high-tax blue states.
The left-of-center Tax Policy Center found that the top 1% of households would receive 56% of the benefit of repealing the SALT cap, and the top 5% of households would receive over 80% of the benefit. The bottom 80% of households would receive just 4%.
The bill creates new welfare payments next year by transforming the child tax credit into a monthly payment with no work requirement and no safeguards against fraud.
Existing refundable credits have a 25% improper payment rate, resulting in significant wasteful spending.
Unbelievably, the bill contains a handout to Democrats’ media allies: a special, industry-specific payroll tax credit for up to $50,000 of wages for as many as 1,500 employees at virtually any media publication in the country. That means even The Washington Post and The New York Times will qualify for the funds.
The legislation also subsidizes electric vehicles for people making as much as $800,000 per year.
While Democrats claim this bill costs just $1.75 trillion and is fully paid for, a recent Congressional Budget Office report found that if all the spending in this legislation were made permanent, the true cost of the bill would be $5 trillion, and the deficit would increase by $3 trillion over the next decade.
As it stands, we are already on an unsustainable path. During the pandemic, Congress has provided $4.5 trillion in new federal funding. Even though the last COVID-19 spending bill was passed in March, $1 trillion has not been spent, and $500 billion has not even been allocated.
American families and small businesses are already hurting from decades-high levels of inflation. Democrats will only make this worse if they continue to try to pass trillions in new tax increases that will raise costs on working families.
• Grover Norquist is president of Americans for Tax Reform.
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