WASHINGTON – Republicans have seized on the tax provisions of the Inflation Reduction Act to hammer Democrats, saying the bill would raise every Americans’ taxes.
The tax issue has become a favored Republican talking point, espoused by party candidates across the nation, including the heated contest in the 2nd congressional district between Republican Tyler Kistner and Rep. Angie Craig.
“Angie Craig plans to raise your taxes,” said a recent release from Kistner’s campaign.
Under the Inflation Reduction Act corporations with earnings of $1 billion or more would be required to pay a minimum tax of 15 percent on earning reported to shareholders on their financial statements, commonly known as book income.
[image_credit]Kistner for Congress[/image_credit][image_caption]Tyler Kistner[/image_caption]
The Republicans have a point because any increase in the corporate tax rate, which would affect a company’s earning, is considered by most economists to be borne by the corporation’s workers, investors and customers.
“Corporations do not pay taxes, people do,” said V.V. Chari, University of Minnesota professor of economics.
Kistner and other Republicans have made much of an analysis by the Joint Committee on Taxation, a non-partisan congressional agency that analyses tax legislation. That analysis said the tax provisions in the Inflation Reduction Act would raises the average tax rate of Americans from 20.3 percent to 20.6 percent.
But most Americans would not experience a tax hike – the cost of that new corporate tax would be paid largely by the investors of a corporation who could see their dividends and the value of their holdings decrease and the corporation’s workers, whose wages and benefits could shrink.
The Inflation Reduction Act was approved by the U.S. Senate on Sunday on a strict party line vote, 50-50, with Vice President Kamala Harris casting the tie breaker.
The U.S. House, now on it’s August recess, will return to Washington D.C. on Friday to vote on the massive bill, which would provide $370 billion in incentives to reduce greenhouse gas emissions and extend expanded Affordable Care Act subsidies for three years, at a cost of about $64 billion. The bill would also reduce prescription drug costs for the elderly and cap the cost of insulin for Medicare patients to $35 a month. A broader insulin cap on all insured was rejected, thanks largely to the votes of Senate Republicans.
But to pay for clean energy incentives and other provisions, the bill imposed new taxes, targeting corporations that were able to avoid paying any levies.
Chari said politicians “should be upfront” and say a corporate tax that trickles down to others “is for a good cause.”
Still most Minnesotans – and most Americans – will not lose any money under the new corporate tax.
In addition, the nonpartisan Committee for a Responsible Federal Budget, said that by 2027, the bill would actually amount to a net tax cut each year, as new credits, including an expansion of premium subsidies for those who purchase health insurance through an Affordable Care Act exchange, and other incentives for low-emission energy sources outweigh the new minimum tax on certain large corporations.
Nevertheless, the Inflation Reduction Act continues to be called a tax hike bill.
“In 2009 President Obama said, ‘The last thing you want to do is to raise taxes in the middle of a recession.’ Yet here today, Democrats in Washington are planning on raising taxes on American families to fund a $700 billion dollar spending package that will in fact raise taxes on American families in the midst of a recession,” Kistner said in an emailed statement.
The Republican who is locked in a “toss-up” race with Craig also said this 700-page bill may very well include small bits of positive policy but at the end of the day that does not justify raising taxes on Minnesotans who are feeling the pain of skyrocketing inflation and a recession.”
[image_credit]REUTERS/Leah Millis[/image_credit][image_caption]Rep. Tom Emmer[/image_caption]
“Everybody making $30,000 a year or more is going to pay more taxes,” he said Monday during a virtual event by the University of Minnesota’s Center for the Study of Politics and Governance.
Meanwhile, Sen. Mike Crapo of Idaho, the top Republican on the Senate Finance Committee who requested the analysis from the Joint Committee on Taxation, said “the Democrats’ approach to tax reform means increasing taxes on low- and middle-income Americans to fund their partisan Green New Deal.”
Craig shrugged off the attacks on Inflation Reduction Act.
“If billion-dollar companies have to pay taxes, it’s just leveling the playing field,” she said.
Craig also said “the bill overall is going to lower the cost for working families and reduce the deficit.”
A report by non-profit group Rewiring America said clean energy tax incentives in the bill would save the average American household $1,800 per year on energy bills.
The Joint Committee on Taxation’s analysis was completed before Sen. Kyrsten Sinema, D-Ariz., forced change in the tax section of the bill to secure her support for the legislation.
The corporate alternative minimum tax was tweaked to help manufacturers by allowing them to continue to take accelerate depreciation of their assets. Another proposed tax, on hedge fund managers, was completely eliminated.
Hedge fund managers make most of their millions and billions of dollars in “carried interest,” a fee on the gains of the money they invest for other individuals and institutions. That earned interest is taxed at 15 percent as capital gains by the Internal Revenue Service. That tax rate is lower than the one most Americans pay the IRS. The Inflation Reduction Act sought to remedy that before Sinema insisted the provision be tossed.
To make up for the revenue lost by Sinema-driven changes to the tax section, a new 1 percent tax on company stock buybacks was added to the bill.
Companies buy back their stocks as a way to reward investors, whose shares usually increase in value. The company also benefits because their per-share measure of earnings increases.
Barron’s said 2022 is set to be a record year for U.S. company buybacks, with some $1.2 trillion forecast to be spent. Companies undertaking buybacks include Apple and Google owner Alphabet.
“Corporations do not pay taxes, people do,” said V.V. Chari, University of Minnesota professor of economics.”
Our tax dollars are going to pay this guy for this kind of nonsense?
Maybe he has heard of this guy Warren Buffet on people paying taxes:
“”I’ll be a fair amount higher, 8 or 9 points higher,” Buffett said of his own tax rate in an appearance on CNBC Monday. “But the differential between me and the rest of the office, not just my secretary but the rest of the office, was greater than that. It’ll be closer, but I’ll probably be the lowest paying taxpayer in the office.”
Sorry to say, but investment bankers and their like may have to come to the realization that to pay for and get satisfactory public safety and public education they need to pay the same rate as the janitor cleaning up their messes every night.
Who going to believe, Dr. CHARI and consensus of experts in the field or Edward.
A Edward uses a qoute of Buffets talking about his personal tax whe. The subject is corporate taxes
It’s quite amazing how “conservatives” tell us that we as a society are apparently supposed to treat corporations as independent “people” for all purposes, except taxation. For that, they somehow don’t really exist!
It’s a very convenient set-up for well paid and powerful corporate officers who direct the billions in actual revenue these corporations earn and control…and plutocrats like it, too!
The idea that it is some sort of benefit to taxpayers or the country for giant multinational corporations to be able to claim zero taxable earnings is preposterous. As is the idea that workers for these companies are going receive lower wages or benefits in today’s labor market. That’s just absurd.
You know, sometimes taxes are not passed on, despite this professors claim. It depends on the demand for the product, and competition, and a variety of factors involved in each market. And if the”profits”of these corporations are reduced because they are now required to pay some minimal (15%!) taxes each year, then the value of their shares was falsely inflated. Meaning it’s a good thing that their books come back to reality.
Anyway, it was a given that our fine Repubs would label even an increase in (some) corporate taxes as a “tax increase on you, Joe Schmoe American!” That sort of misleading disinformation is part and parcel of their dyed in the wool method of deceit, to be distributed far and wide by their Noise Machine.
This article should say that “taxes would be raised on almost no Minnesotans”, but at least it gives people a chance to see how tenuous the Repub “argument” is. We’ll see how well it works, given that a minimum corporate tax on giant corporations is highly popular.
I’d also note that these Repub arguments apply equally to ALL corporate taxes, not just this new minimum tax for giant corporations. So this is just more of their tired argument that the ordinary schmoe is the one “really” paying all corporate taxes and the world would be a paradise without any such taxation. Which dovetails nicely with what the CEOs and plutocrats who fund the Repub party and “conservative” movement also believe.
Quite a coincidence, eh?
The IRS will be hiring 87,000 new IRS agents. Eighty Seven Thousand. That’s more agents than the FBI and the border patrol combined. They don’t need 87,000 new agents to audit just rich people. And you will pay the new corporate taxes through higher prices. That’s why this law should be called the “Inflation Enhancement Act.”
That same quote about the number of new IRS agents and the FBI keeps showing up. Is there some magical number of IRS agents that would be permissible? It seems almost every business/institution is strapped for workers to get the job done these days. That includes restaurants, manufacturers, pilots, teachers, etc. Why not IRS agents? Who cares if they audit more than just the super-rich? I don’t. They can’t ‘target’ someone like me if I don’t cheat on my taxes. Which I don’t. Or is that what you are really worried about? Same for Andy Briebart. You seem to have a problem with the IRS just doing its designated job.
“They can’t ‘target’ someone like me if I don’t cheat on my taxes. ”
Oh they can’t eh? I’ve been audited twice and I’ve never cheated on my taxes and the audits showed that. Of course, my audits came right after I wrote letters to the editor criticizing democrat politicians, so you’re probably safe there.
You don’t say that these letters were published anywhere, or when these audits supposedly happened, but in any event this is very dubious. Also, how many letters to the editor do you pen in an average year?
And as though anyone in the IRS would ever care you wrote some Dem-critical missive to a newspaper editor. How many thousands of conservatives do that every week for decades now?
You know, I’ve been called for jury duty 3 times. But never been audited. FYI, failing to report all of your income is the top reason a person gets audited. I don’t know if you cheated on your taxes, but getting called for jury duty is a matter of luck. Getting audited generally isn’t. You should be happy that they’re going to try to fully fund the IRS. After all, the reason they pick on people of lower income is because it’s cheaper and easier than going after the big cheaters. They might start ignoring you if they can go after people like TFG for cheating on taxes. Taxes that pay for a lot of things that you get as a former military personnel, by the way. It doesn’t matter if you “earned” anything spending time in the military – you get nothing unless the rest of us, and YOU, pay for it. Finally, did it occur to you that most of those people they intend to hire for the IRS are not auditors? They’re people who would make sure your tax refund got back to you quicker.
Or maybe it’s a start towards trying to make up for all this agency has lost:
https://www.propublica.org/article/how-the-irs-was-gutted
It’s certainly true that when businesses start laying people off because of increased costs and taxes (during an economic downturn no less)those former employees will have a lower tax burden. Great plan, Democrats.
Stop rooting for failure and start rooting for America.
Um, having a recession is not part of any Dem “plan”. If indeed we even enter one, which now seems unlikely.
Which Repubs now seem to regret. But America First!
“That earned interest is taxed at 15 percent as capital gains by the Internal Revenue Service.” Can’t recall the last time I payed 15% or less. As always, the “R” folks cry about deficit spending, and then cry when you try to reduce it with a few nickles of increased revenue from the wealthiest of the wealthy. As Edward noted with Buffet’s comments, even a few nickles hardly makes a dent.
Just think of all those new IRS agents. They will be following everything you do via the tax code.
Think of all the “interpretations” the IRS will find in the tax code to sick havoc on the Democrat’s enemies. Think of all the new government climate change mandates will be enforced by the IRS through the tax code? Will you get raided by the FBI? or the IRS? Will they just make your life miserable with an audit? More IRS agents and no border agents? What will small business do?
In other words, let’s not enforce the tax laws because some whiny conservatives don’t like them.
Never had a worry about an IRS audit, and pretty sure I never will. Don’t resort to complicated tax loopholes to cheat my country of revenue, so no worries for me. I could see the concerns for the tax cheating conservatives of the world, and it makes me smile.
The tax cheats are getting nervous. RE-funding the IRS is the best part of this already good legislation. It’s time to put the cops back on the beat.
Higher corporate taxes could result in lower wages. Sure, if workers stick around to take pay cuts. We are talking about huge companies like Amazon, that demand expensive government services, but think they should be able to pay no corporate taxes. Sorry, Bezos, building up your wealth through not taxing your investments is not a priority.
All these comments demonstrate is the ability of ordinary “conservatives” to ingest the approved Rightwing Noise Machine talking points hook, line and sinker. The “IRS agents” conspiracy theories dressed up as plausible arguments is particularly telling.
The super-rich are literally robbing the nation blind with their dubious tax avoidance schemes, and we’ve got ordinary Joes up in arms in defense of tax cheating and feigned worry over audits of W-2 filers. The IRS is going to go where the money is. End of story.
It appears that too many conservatives will believe anything. Or claim to…
“But most Americans would not experience a tax hike.”
This is promoted by the same people who cannot define “recession” and also stated that “inflation” would be transitory.
However – it is true – corporations do not pay taxes.
If corporations don’t pay taxes, why do their officers hire an army of lobbyists to vehemently oppose any increases in corporate tax rates? Why do the CEOs and CFOs even care about tax rates, if you are correct? Because they are so altruistic that they want to protect us ordinary schmoes from increased taxation?
To simply ask the questions answers them.
And there is a very structured process for having a recession “declared”, whether you want to understand that fact or not.
“This is promoted by the same people who cannot define ‘recession’ . . .”
This is not the first time I have seen that talking point raised here. It must be a current theme of right-wing agitprop.
For at least the past half-century the federal government has relied on the National Bureau of Economic Research to make its “official” declaration of a recession. Even though the people who work for that Bureau went to college and probably think they’re really smart, I would rely on their judgment over that of, say, Sean Hannity.
Really, you’re saying that inflation is permanent? Really? Is that what Faux news is telling you, so you have to keep in line and repeat that nonsense.
Today is the 58th day in a row of gas prices lowering since the height in June, 58 days in a row, but that’s not transitory. I see.
Since you and your ilk can only complain about gas prices (I’m not poor, so I don’t really care how much a gallon of gas costs), today is better than yesterday and so on, and on.
Faux news must have told you the word recession too. There are online economic course you can take to correct your misconceptions about that concept, check it out.
To be fair, we WANT inflation to be permanent. It’s a sign of a growing economy. It’s just that the GOP rank and file just recently were told that it’s bad, mmkay? So we don’t want it! And it’s the Democrat’s fault! A moderate inflation level is a good thing; high inflation is temporary. As a matter of fact, inflation is already going down, even before this bill gets passed by the house. Why? Because part of inflation is about consumer and investor sentiment. The fact that help is (probably) on the way has cooled down spending. Also, the interest rate hikes have cooled down spending. Demand for labor is still high, though, so unemployment is unlikely to increase anytime soon. That last bit tells us we’re not in a recession. That said, the idea that the sky is falling can CREATE a recession. If Fox News creates enough fear in consumers, it can CAUSE a recession. All the Chicken Littles on here make me wonder if we won’t see a recession because the GOP needs it to win the next election. What a sick, sad strategy.
The stress hormones that Fox is designed to cause its viewers to produce make them very loyal, very angry, and unlikely to question what they’re being told. Unfortunately, elevated stress hormones increase your risk of early death. I highly recommend to everyone to stop watching the news and switch to reading only. It’s better for your health, especially if you’re regularly watching Fox, which is designed to manufacture fear and anger.
Looks like another questionable government spending wish list. The only way people benefit from this is by spending money they don’t have on things they can’t afford or the IRS funding it’s massive expansion with found unpaid taxes.
The economics of these programs don’t add up for the average citizen and leave little to be excited about other than it’s meager attempt to address the deficit.