Weekly Column: Biden's Economic-Growth-Stifling Budget Proposals

As Ranking Member of the Senate Finance Committee, I had another opportunity recently to question a member of President Biden’s Cabinet about troubling proposals in the President’s budget request to Congress.  This time it was U.S. Department of Treasury Secretary Janet Yellen, who appeared before the Committee to defend the President’s staggering $7.3 trillion budget proposal, which includes nearly $5 trillion in new and increased taxes.

At the hearing, I expressed concerns with these familiar partisan tax-and-spend proposals: increasing taxes on businesses; tax hikes on American energy production that would decrease our energy independence and eliminate good-paying jobs; a tax hike on savings and investments; a tax hike on generational family businesses; the list goes on for many items that even a Democrat-controlled Congress previously rejected.  Such tax proposals slow the economy and will affect all Americans through lower paychecks and higher household expenses.

However, the most notable tax increase Americans would face under the Biden budget is one that went conspicuously unmentioned: the tax increase that would result for households earning less than $400,000 if the tax cuts from Republicans’ Tax Cuts and Jobs Act (TCJA) are not extended.  While the Administration continues to spread misleading information about the TCJA, it cannot deny that if the TCJA individual tax cuts are not extended, individuals making less than $400,000 would face a more than $2 trillion tax increase, breaking President Biden’s pledge.

Prior to the pandemic, the TCJA’s pro-growth policies translated into wage increases, record low unemployment, higher incomes, stronger wage and wealth gains for lower-income Americans than higher-income Americans and reduced inequality.  The largest wage gains were concentrated in the bottom quarter of the wage scale.  For American businesses, TCJA introduced competitive tax rates while broadening the base and putting an end to corporate inversions.  It also led to record-high corporate tax receipts, both nominally and as a share of gross domestic product. 

Instead of taking note of TCJA’s successes, President Biden, for the fourth time, proposed trillions of dollars of tax hikes on American businesses.  Biden proposed increasing the corporate tax rate to 28 percent, which, according to the Tax Foundation, would result in the U.S. having the second-highest combined rate among developed countries.  Economists agree that a tax increase on American businesses will be passed on to working families in the form of higher prices and lower wages. 

Notwithstanding these economy-stifling proposals in the President’s budget proposal, Treasury Secretary Yellen committed to support extending the individual tax provisions in the TCJA for taxpayers making less than $400,000, and recognized that failing to extend TCJA provisions, such as the doubling of the child tax credit to $2,000, would run counter to President Biden’s commitment to not raise taxes on Americans earning less than $400,000 per year.

In stark contrast to the Republicans’ achieved objective of lower taxes and competitive rates, President Biden’s vision for American workers and companies is clear: higher taxes and uncompetitive rates for the majority to support government subsidies for a few.  I will continue pushing for sound tax policy that builds on the TCJA’s success and results in pro-growth tax policy for Idahoans and all Americans. 

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