Even Democrats Used To Know Raising Taxes During A Recession Is Bad. What Changed?
During a recession is precisely not the time to raise taxes — even Democrats used to believe that. In the past, Sen. Chuck Schumer, Janet Yellen, Sen. Joe Manchin, and former President Barack Obama all warned about the dangers of raising taxes during a recession. But that was then, this is now.
Today, Democrats are trying to pass the falsely named “Inflation Reduction Act.” (IRA) This $740 billion in new tax hikes and spending reconciliation bill is an homage to Green Energy Greed. It will spawn a new generation of failed Solyndra-like pet projects that will harm low-income Americans and do almost nothing to slow global emissions.
Instead, government must unleash the U.S. energy sector to liberate oil production and restore U.S. energy independence so that we are not reliant on foreign oil producers.
The “Inflation Reduction Act” proposes to reduce the deficit and lower inflation by increasing taxes, but it will fail to do what its name claims. According to preliminary estimates from the Penn Wharton Budget Model (PWBM), this bill would actually slightly increase inflation for the next two years.
American Enterprise Institute’s Michael Strain also shares new data from Moody’s Analytics showing “The ‘Inflation Reduction Act’ wouldn’t begin to reduce inflation at all until the second half of 2023. In 2027Q2, the CPI would be 0.1% lower than it would have been w/out the bill.”
Tax hikes, through the IRA’s minimum corporate income tax rate, will target industries that are critical for our supply chain. Manufacturing will bear much of the proposed corporate tax hike.
Manufacturing and other industries are critical to our supply chain, which continue to struggle to meet demand. Tax increases on businesses get passed on to customers through higher prices and workers through pay cuts. Companies will be forced to cut back on hiring to pay for the IRA’s corporate rate tax hike.
The nonpartisan congressional Joint Committee on Taxation released a July 29 report estimating the IRA 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.
We are in a recession, with painful food and gas prices hitting families, causing them to load up on credit card debt at a rate not seen in 20 years just to get by. Some 61% of Americans say they’re living paycheck to paycheck. And it’s the families with fixed or low incomes who are hurting most. Sadly, many elites in government are shockingly out of touch with what this means for families and their budgets, continuing down the disastrous path we are on.
While the administration challenges the notion that we are in a recession and tries to paint a rosy picture for Americans, there is nothing that’s more top of mind right now for Americans than the higher prices they’re facing at the grocery store, at the gas pump, and just to cool their own homes.
The Senate could vote on the IRA this week, and all eyes are on Sen. Kyrsten Sinema (D-Ariz.) and whether she’ll support this bill that will destroy our economy even further. Sinema hasn’t said publicly if she’ll back the IRA, which needs all 50 members of the Senate Democratic Caucus to pass. Here’s hoping Sinema does the right thing and protects American families from this reckless spending spree.
Carrie Sheffield is a senior policy analyst at Independent Women’s Voice.
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