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U.S. Senate Committee On Finance: Two Opposing Views On Biden Administration Tax Hikes



U.S. Senate Committee On Finance On Tax Hikes

JCT: Democrats’ Proposals Increase Taxes on Millions of Americans

Millions of Americans making less than $400,000 per year would see tax hike.

Washington, D.C.–The nonpartisan Joint Committee on Taxation (JCT) estimates the Democrats’ latest reckless tax-and-spend proposal will increase taxes on millions of Americans across every income bracket, with more than half of the tax increases on Americans making less than $400,000 per year.

“While Republicans’ pro-growth tax reform in 2017 reduced tax rates for all Americans in a way that increased the progressivity of the tax code and produced historic gains in job and wage growth, the Democrats’ approach to tax reform means increasing taxes on low and middle-income Americans to fund their partisan Green New Deal,” said U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho), who requested the analysis.  “Americans are already experiencing the consequences of Democrats’ reckless economic policies.  The mislabeled ‘Inflation Reduction Act’ will do nothing to bring the economy out of stagnation and recession, but it will raise billions of dollars in taxes on Americans making less than $400,000.”

According to JCT:

  • In 2023, taxes will increase by $16.7 billion on American taxpayers earning less than $200,000—a nearly $17 billion tax targeted solidly at low- and middle-income earners next year, amidst stagflation.
    • The $17 billion hit alone is confirmation that the Biden pledge to not raise taxes on anyone earning less than $400,000 is shattered by the latest tax-and-spend bill.
    • The proposal would raise another $14.1 billion from taxpayers earning between $200,000 and $500,000.
    • According to JCT data, 98 percent of all tax returns filed by those in the $200,000 to $500,000 category are filed by those earning between $200,000 and $400,000, with at least three-fourths of the income in the $200,000 to $500,000 category also coming from those below $400,000, meaning it is likely that at least half of all new tax revenue raised next year would come from those earning under $400,000.
  • Throughout the ten-year window, the average tax rate for nearly every single income category would increase.
  • By 2031, when the new green energy credits and subsidies provide an even greater benefit to those at higher incomes, those earning below $400,000 are projected to bear as much as two-thirds of the burden of the additional tax revenue collected that year.

“The more this bill is analyzed by impartial experts, the more we can see Democrats are trying to sell the American people a bill of goods,” Crapo continued.  “Non-partisan analysts are confirming this bill raises taxes on the middle class and produces no meaningful deficit reduction when gimmicks are removed and the full cost is accounted for.  It’s no wonder this bill, which was drafted behind closed doors, is being rushed through the Senate at record pace.”

To view JCT’s distributional analysis, click here.  To view JCT’s revenue table, click here.

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On the other hand, across the isle the Democrats say:

Wyden, Warren Release New Data Showing Big Pharma, Tech, Apparel Companies Pay Corporate Minimum Tax

Republicans misleadingly claim that ‘American manufacturers’ pay half of corporate minimum tax to shield well-known tax dodgers operating offshore

Washington, D.C.—In response to Finance Committee Republicans release of misleading data suggesting the corporate minimum tax was primarily a tax on “American manufacturers,” Senate Finance Committee Chair Ron Wyden, D-Ore., and Senator Elizabeth Warren, D-Mass., today released additional data provided by the Joint Committee on Taxation (JCT) that rebuts this deceptive claim.

About half of the 15 percent corporate minimum tax paid by “American manufacturers” would include well-known tax dodgers in the pharmaceutical and technology industries, as well as other outsourcers like the apparel industry, where 97 percent of clothing sold in the U.S. is made in overseas factories.

“Republicans always distort the truth about tax changes to protect corporate tax dodging, but this new analysis shows they’re clearly wrong about the corporate minimum tax proposal and manufacturing. Big pharma, tech and apparel companies would account for half the revenue coming in from ‘manufacturers’ under the corporate minimum tax. These companies are playing the most games, and avoiding tax by manufacturing their drugs, phones, and shoes abroad. This is a minimum tax for tax dodgers stamping ‘Made in China’ on their products,” said Wyden. “Here’s an example of the kind of company we’re talking about: The Finance Committee just released a report showing that one of the biggest drug companies in the world paid about 9 percent in taxes while making nearly $8 billion in profit. This company produces its best-selling drug overseas, while the vast majority of its revenue is from American customers. This is the type of company Republicans are defending to justify their continued support of corporate tax avoidance. The American people know that’s wrong, and they want to see companies with billions in profits contribute their fair share.”

“This analysis shows that American manufacturing would not be hurt by having multinational corporations pay a 15% minimum tax on billions in profit. About 200 of the largest, most profitable corporations ship jobs overseas while paying a lower tax rate than most business and workers,” said Warren. “Republican politicians and their corporate lobbyist friends are rushing to defend tax loopholes for billionaire corporations, while Democrats are working to invest in manufacturing clean energy technology and lower costs for working families.”

The JCT analysis is available here.

SPECIAL NOTE:

TaxConnections would greatly appreciate commentary from the tax professional community. You understand taxes and the impact on individuals and small, medium and enterprise size clients more than anyone. You are working in the mist of all of the pending federal and state tax hike proposals. Taxpayers need your input to make sense of it and how these tax hikes help the hardworking people of the United State of America. Please comment and offer your views and opinions below.

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