Larry Kudlow: Show me any textbook that says major tax hikes will promote economic growth
FOX Business host weighs in on Biden’s Afghanistan failure and the democrats’ spending spree on ‘Kudlow’
So, my overall take on the reconciliation info coming out of the House is quite simple: go woke, go broke, and this whole reckless tax, spend and regulate plan will inflict great damage on the blue-collar middle-class workforce, jobs, wages and prosperity—great damage.
I love it today when Secretary of State Blinken blamed Donald Trump's conditional Afghan withdrawal plan for the catastrophe executed by the Biden administration—love that!
Let me get this right. They were absolutely bound and hand-cuffed to Trump's plans, but, wait a minute, they have religiously, obsessively, derangedly overturned every Trump policy.
They overturned his tax cuts; his regulatory reduction; his energy independence; his Israeli support; his Iranian hostility; his border policies on security and immigration; his policies towards police, recidivous crime; and I’m sure I’m forgetting other things.
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So, we are supposed to believe that Biden’s Trump Derangement Syndrome forced him to follow Trump's Afghan withdrawal policies (which, by the way, were conditioned and gated in a number of areas that were never fulfilled and the former president himself said he would have taken fierce combat action against the terrorist Taliban if they acted out as they did in breaking his deal during the Biden evacuation)?
Coming back to all the tax policy problems we'll discuss this evening, one of the most amusing aspects coming out of Ways and Means is that the sum total of revenues is estimated to be $2.9 trillion. Then the document states that, combined with dynamic growth estimates by the White House of an extra $600B, this will fully offset the $3.5 trillion reconciliation spending package.
So, let me get this right. A $2.9 trillion tax hike across the board on every category of producer, investor, worker—every category— is going to increase growth? Really? Naughty, naughty. They're off the Laffer Curve.
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All I ask on this one is a textbook reference that says jacking up taxes by record amounts will boost growth. I don't care if it's a supply side textbook, a demand-side textbook, a Keynesian textbook, a neoliberal textbook, probably a Marxist textbook (but I’ve never read one of those). Just show me a textbook that says major tax hikes will promote economic growth.
Just saying, folks. Find me some intellectual support for this inane view.
Focusing more narrowly on these tax proposals, it looks like the hardest-hit area is going to be small business, which in many ways is the heartbeat of America.
I will quote the language of my pal, Dan Clifton, who writes today, "a small business owner with $500K of income will see their income tax rate increase, the amount of income subject to that tax rate increase, have a new 3.8% surtax, and lose a 20% deduction. The business owner could be looking at a 46-48% income tax rate before even considering payroll taxes and state and local taxes."
I don't know what it is about Democrats that want to vent their spleens and punish small business people. Maybe Joe Biden or Ways and Means chair Richard Neal once had their dog run over by a small business person and have never forgiven them. I mean I can't think of a reason why, of all the economic constituents out there, they want to punish small businesses the most.
Now big business gets hit too. The corporate rate jumps to 26.5% from 21%, add on 4% for state average and you're looking at over 30% —probably still at the top of OECD developed countries. Capital gains tax will go up from 20% to 25% plus, of course, the 3.8% Obamacare surtax.
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Tennessee Senator discusses President Biden’s tax hike and it’s effect on small businesses on ‘Kudlow’
The top individual income tax goes to 39.6%; plus a 3% surtax on income over $5 million-plus limited deductions for highly compensated executives; plus some whacks at estate and taxes on gifts to grants or trusts; plus, of course, tax hikes on corporate international income
The gory totals are roughly a trillion dollars in tax increases on individuals, $900 billion on business, $700 billion on drug companies, and $120 billion on IRS enforcement. This is preliminary stuff. The Senate Finance Committee has to weigh in and so will the White House.
Basically, almost all people who work in business will be paying a combined tax rate above 50%.
Of course, quoting from numerous studies such as the CBO, Joint Tax, the Tax Foundation, the biggest burden of corporate tax hikes will fall on middle-income people, blue-collar workers.
Profits will fall. That means less money for wage increases, less money to hire, and less money to invest in new plants, equipment and technology that would make the workforce highly productive. None of that will be possible with business tax hikes.
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Hogan Gidley, former White House deputy press secretary, and Paige Willey, former White House political affairs adviser, discuss President Biden’s vaccine mandate on ‘Kudlow’
I do want to mention America’s drug companies working in partnership with the federal government—of course, the Trump Operation Warp Speed, developing a COVID vaccination in 6 months instead of 10 years, literally saving the country amidst the worst pandemic in 100 years.
The Democratic reward for the drug companies' ingenuity and patriotism is to jack up their taxes, clamp down on price controls, and force them to pay additional Medicare rebates and abide by socialist European price controls. That's the way the Democrats say thanks to our pharmaceutical and biotech innovators.
Apart from the Tax Committee, circling the wagons in areas of the House are immigration policies that would provide amnesty to dreamers, so-called essential pandemic jobs with an eligibility starting date that could permit a million illegals who have crossed over this year to claim a path to citizenship.
This doesn't belong in reconciliation. We surely need immigration reform but that's a separate issue from the budget.
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I’m also reading that any part of the economy, including the over $500 billion of global warming, Green New Deal, electric car subsidies and renewable fuel subsidies, any business, receiving any of those monies, must have a union shop by law.
I noticed already in this morning's paper that Toyota and Honda, which are two huge built in America carmakers, are protesting this as they should.
So, I’ll leave you with this question tonight: Is it possible that some common sense could prevail to defeat this economic monstrosity? Is it possible?
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