Steil, Republicans aren’t buying that taxing the rich will cover Biden’s $6T spending plans Biden RACINE — By beefing up the Internal Revenue Services to go after billionaires who aren’t paying their share of taxes through loopholes and other methods of dubious legality, President Joe Biden aims to fund massive new spending plans to help
Steil, Republicans aren’t buying that taxing the rich will cover Biden’s $6T spending plans
RACINE — By beefing up the Internal Revenue Services to go after billionaires who aren’t paying their share of taxes through loopholes and other methods of dubious legality, President Joe Biden aims to fund massive new spending plans to help the nation see the light at the end of the COVID-19 pandemic tunnel.
But U.S. Rep. Bryan Steil, R-Wis., and other Republicans aren’t buying it: They don’t think it’ll be possible to recoup as much as $6 trillion in new spending in 2021 the Biden administration is considering in 2021 alone.
“I look at what the Biden administration is proposing: The spending side is $6 trillion new spending this year — that’s unreasonable. It’s not focused. It’s going to have a lot of inefficient, wasteful spending associated with it,” Steil said during a phone call Thursday afternoon, less than 24 hours after Biden’s primetime 100th day address.
This is one of the major political battles less than halfway into the first year of Biden’s presidency that could set the tone of how the next decade goes, both for the climate in Washington and the course of government action nationwide.
“President Biden emphasized willingness to work across party lines. His infrastructure plan, where Republicans have a detailed alternative, provides an immediate test,” Art Cyr, director of the A. W. Clausen Center for World Business at Carthage College, said in an email.
It’s an age-old normal divide seen between Republicans and Democrats: conservatives saying they want to keep the government out of day-to-day life, liberals calling for more government interference to address societal problems.
Who would bear burden?
“Out of the gate he (Biden) has got two proposals,” Steil explained. “No. 1: He claims he is only going to tax the rich. When you look at the size and scale of the Biden spending plan, it’s very clear I think to most Americans that it’s going to be: Tax the rich today, it’s going to tax everybody tomorrow.
“No. 2: He wants to take the corporate tax rate and make it higher than Communist China. Communist China’s corporate tax rate is 25%. The Biden plan wants to move the American rate above China’s rate.”
Although it’s questionable whether China is truly “communist” as its economy grows — China ranks as the 124th most economically free country in the world, according to the Fraser Institute’s annual report; the U.S. is sixth — Biden’s tax proposals would bring corporate taxes in the U.S. higher than China’s rates.
As The Tax Foundation, a Washington D.C.-based tax policy nonprofit, reported on April 1: “President Joe Biden’s proposal to raise the federal corporate income tax rate to 28 percent would increase the combined average top tax rate on corporate income to 32.4 percent, highest in the Organisation of Economic Co-operation and Development, reducing U.S. competitiveness and long-run economic growth.”
That said, the Tax Foundation noted that corporate taxes for many U.S. businesses are currently above 25% due to state corporate taxes: “Under current law, corporations in the United States pay federal corporate income taxes levied at a 21 percent rate plus state corporate taxes that range from zero to 11.5 percent, resulting in a combined average top tax rate of 25.8 percent in 2021.”
A plan to raise taxes on businesses is one that progressive leaders such as U.S. Sens. Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont have repeatedly proposed and advocated for, but are finally now getting traction as progressive policies become more popular.
Even if taxing corporations — notably, Amazon, Charter Communications (Spectrum), Nike and FedEx have paid $0 in annual federal taxes at some point in the past couple years — brings in more revenue for the federal government to pay for the Biden administration’s ambitious programs, Steil and other conservatives fear it could be a job killer; the U.S. is competing to bring jobs with countries such as China and Mexico, which offer much cheaper labor.
“Unfortunately,” U.S. Sen. Ron Johnson, R-Wis., said in a Wednesday statement, “President Biden’s agenda is massive spending, massive tax increases, open borders, and attacks on energy that will harm our economy and threaten American jobs.”
The Biden administration and its supporters are betting that government-encouraged investment in new, renewable energy and other infrastructure projects will offset potential job losses.
As the Associated Press reported following Biden’s Wednesday night address: “The president’s proposals include massive investments that Republicans argue are stretching the definition of infrastructure — electric-vehicle charging stations for the automobiles of the future, as well as the construction of new veterans hospitals, child care center services and other facilities. As investments in families, there are promises of free preschool for 3- and 4-year-old children, free community college and tax breaks that send as much as $250 a month to households with children.
“Together, Biden’s two proposals would be paid for by raising the corporate tax rate from 21% to 28% and hiking taxes on the wealthiest 1% of Americans earning above $400,000.”
Julie Pace, Associated Press Washington bureau chief, noted in an analysis: “Forty years ago, a newly elected American president declared government the source of many of the nation’s problems, reshaping the parameters of U.S. politics for decades to come. On Wednesday night, President Joe Biden unabashedly embraced government as the solution,” by arguing explicitly that Ronald Reagan’s ‘trickle-down economics has never worked.’ ”
“I’m not out to punish anyone,” Biden said Wednesday, “but I will not add to the tax burden of the middle class of this country.”
Still, the big spending plans are a poison pill for conservatives; Senate Majority Leader Mitch McConnell called Biden’s ideas a “Trojan horse” that will lead to middle-class tax hikes.
Regardless of Biden’s intentions, Republicans fear employers may become less willing to establish or deepen roots in the U.S. if tax hikes on the wealthy and corporations go through.
“It’s a liberal wish list of Big Government waste” with “the biggest job-killing tax hikes in a generation,” U.S. Sen. Tim Scott, R-S.C., said during the GOP response to Biden’s speech Wednesday, a retort that Steil said he loved.
“We’ve worked really hard for the previous handful of years to bring jobs from places like Communist China, to the United States of America,” said Steil, whose district includes all of Racine and Kenosha counties and parts of the surrounding counties, “and, before we got punched in the face by the coronavirus, we were making great progress on bringing jobs to the United States. We were seeing low unemployment rates. We were beginning to see rising wages. And then we obviously went through a very tumultuous, very difficult 13 months.
“And now, right as we are coming out of that period of time, instead of putting forward policies … that allow people to get a better job right here in Racine County or Kenosha County or across southeastern Wisconsin, his (Biden’s) proposal puts a burden on employers and gives an advantage to countries like Communist China that if his plan was implemented would have a lower corporate tax rate, a lower employer tax rate than we would here in the United States.”
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Pete Wicklund of Lee Newspapers contributed to this report.
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