U.S. Senator Mike Crapo (R-Idaho), Ranking Member of the Senate Finance Committee, delivered remarks on the Senate Floor on the Democrats’ $3.5 trillion reckless tax-and-spending bill. Senator Crapo serves as the top Republican on the Senate Finance Committee, with jurisdiction over our nation’s tax policies. In his speech, Crapo highlights the many harmful tax hike proposals that will cause immediate and long-term damage to our economy, and send many of our most successful businesses and the jobs they provide abroad.
On the Democrats’ $3.5 reckless tax-and-spend proposal:
“Democrats intend to couple runaway spending with job-and-growth-killing tax hikes to form their reckless spree of tax-and-spend policies.
“The Democrats’ budget proposals include provisions that will cause immediate and long-term damage to our economy, and send many of our most successful businesses and the jobs they provide abroad.”
On specific tax hikes:
“[Democrats] propose increasing taxes on all kinds of businesses, large and small, leading to lower wages, fewer jobs and higher prices for consumers.
“They would allow rival countries to change the international tax system for the worse.
“They propose enacting a double-death tax, particularly harmful for family farms and small businesses.
“They want to substantially increase taxes on investors, entrepreneurs, savers and retirees.
“They want to drastically expand the powers of the IRS, while limiting its accountability, and turn banks into private investigators for monitoring law-abiding Americans.
“Their ideas will raise taxes on middle-class individuals and families, and not just those earning more than $400,000. At the same time, they want tax relief for some of the wealthy living in high-tax-and-spend states.
“They are also seeking to impose government price controls on the pharmaceutical industry that will stifle medical innovation.”
On sound fiscal policy:
“Before the pandemic, a combination of reduced regulatory burden and pro-growth policies, including the Tax Cuts and Jobs Act, helped to create one of the strongest economies in our lifetimes, with all-time high median household income, a 50-year low unemployment rates, and real wage gains, especially for low-wage workers.
“We would do the American people a disservice if we mortgaged their future while undermining the foundations of their past success. We should instead be building on time-proven, pro-growth policies, not reversing them to fund a reckless spending spree.”
Full remarks, as prepared for delivery:
Thank you Mr. President. I rise to speak about the harmful tax-and-spend policies we may shortly be debating here.
First, I want to differentiate between the bipartisan infrastructure legislation we are currently debating and the separate, looming debate on my Democratic colleagues’ $3.5 trillion reckless tax-and-spend proposal.
Senators on both sides of the aisle have long agreed on the need to modernize and expand our hard infrastructure, including transportation systems and broadband networks, in a bipartisan manner. Infrastructure investments have traditionally been accomplished through bipartisanship and regular order.
Traditional, hard infrastructure investments include funding of roads and bridges, transit, rail, airports, drinking water and wastewater infrastructure, ports and inland waterways, water storage and broadband infrastructure.
The bipartisan infrastructure bill we are considering today focuses on those core elements and is built around several vetted, unanimously consented committee-passed bills.
It includes a number of priorities important to Idaho, including billions of dollars for roads, highways and bridges; funding for high-speed internet and broadband infrastructure deployment; millions in water infrastructure, including for groundwater storage and conveyance; funding for resiliency against natural disasters like wildfires and droughts; a reauthorization of the Secure Rural Schools program; and much more.
It does not raise taxes.
It reprioritizes the use of certain unused COVID-relief funds from previous spending bills, away from bailouts and idle funds, and toward supply-side investments that will provide benefits to the American people for many years.
Because this infrastructure spending focuses on long-term productivity rather than near-term demand, it will not be inflationary.
In fact, it will counteract the inflationary pressures we are seeing as a result of excessive spending.
This is especially critical right now, as rising prices are impacting families and small businesses across America.
In June, the Bureau of Labor Statistics reported that consumer prices were up 5.4 percent from one year ago, the largest increase since August 2008. Consumer price inflation has been accelerating since the beginning of the year, and American families pay the price. In the past year, gas prices have increased 45.1 percent, the cost for major appliances has increased 13.7 percent, airfares have increased 24.6 percent, and the list goes on.
A recent University of Michigan survey showed that consumers expect prices to rise 4.8 percent over the next 12 months.
And, a National Federation of Independent Business survey found that 47 percent of companies are increasing average selling prices, up seven percentage points from May and the highest share in four decades.
Economists on both sides of the aisle have warned that excessive, non-productive spending could put us in this position.
Despite these warnings, in March, Democrats passed nearly $2 trillion in purported “COVID relief” spending on top of the nearly $4 trillion that had already been spent, a fraction of which was pandemic-related.
That poorly-targeted package has grown the national debt, spurred inflation and discouraged workers from returning to the workforce. Now, Democrats are proposing to spend an additional $3.5 trillion to balloon the federal government even more.
And that’s just the advertised price. According to the non-partisan Committee for a Responsible Federal Budget, the Democrats’ new legislation will actually cost closer to $5 to $5.5 trillion over ten years.
Democrats intend to couple runaway spending with job-and-growth-killing tax hikes to form their reckless spree of tax-and-spend policies. They intend to go it alone with this social spending spree through another budget reconciliation process in a 50-50 Senate, which is willfully partisan.
Yet, amazingly, despite having the tools to raise the debt limit within this process, Democrats want to ignore the debt implications of their reckless budget.
If the Democrats are going to cram down this massive tax-and-spending spree, they will have to deal with the debt limit themselves. Yet they do not include dealing with their irresponsible growth of our debt in their bill.
The Democrats’ budget proposal includes provisions that will cause immediate and long-term damage to our economy, and send many of our most successful businesses and the jobs they provide abroad.
They propose increasing taxes on all kinds of businesses, large and small, leading to lower wages, fewer jobs and higher prices for consumers. They would allow rival countries to change the international tax system for the worse.
They want to raise taxes on our businesses in hopes that other countries may raise theirs sometime in the indefinite future, while ceding U.S. taxing rights to our competitors today.
They propose enacting a double-death tax, particularly harmful for family farms and small businesses.
They want to substantially increase taxes on investors, entrepreneurs, savers and retirees.
They want to drastically expand the powers of the IRS, while limiting its accountability, and turn banks into private investigators for monitoring law-abiding Americans.
Their ideas will raise taxes on middle-class individuals and families, and not just those earning more than $400,000. At the same time, they want tax relief for some of the wealthy living in high-tax-and-spend states.
They are also seeking to impose government price controls on the pharmaceutical industry that will stifle medical innovation.
Democrats plan to hike the tax rate paid by all types of businesses, including corporations, ignoring the fact that a significant portion of this tax burden is paid by workers.
As the U.S. Chamber of Commerce notes, most corporations are small businesses, with 84 percent of them having fewer than 20 employees.
As to who actually bears the burden of a corporate tax increase, estimates say that workers shoulder anywhere from 20 to more than 70 percent. A higher corporate tax rate would hit the nest eggs of everyone saving for retirement.
This stealthy–but very real–tax hike would hit retirement savers across the spectrum, falling heavily on the middle class and elderly through retirement accounts and pensions, clearly violating President Biden’s pledge not to tax anyone making less than $400,000.
Any business tax increase will directly hit the very small businesses and workers the Administration claims it wants to help.
The Democrats’ tax plan would reverse the smart policies the Tax Cuts and Jobs Act adopted, once again raising the relative cost of doing business in America and punishing American businesses selling their products or services overseas.
They fail to acknowledge that the tax increases in their plan will rocket the United States back into the outlier position it once occupied compared to peer nations. Once again, we will have the highest tax rates of the developed world, or at least very near the top.
The Democrats are intent on winning a race to get to the top of the heap in terms of international corporate tax rates.
Their international tax proposal would more than double the minimum rate paid by U.S. businesses on their foreign earnings to 26.25 percent. This hike far outstrips the 15 percent minimum rate promised by some of our largest international competitors at the OECD.
If the Administration wants to promote economic growth that will benefit American workers and savers, why is it sharply increasing taxes on its global businesses when no other country even levies such taxes?
The Administration’s international tax proposal seems designed to re-ignite the job-crushing inversions and foreign acquisitions of American companies that the Obama Administration faced. There is no reason to tax our businesses into moving abroad, as the Democrats’ proposals will do.
Family Farms and Small Businesses
Today, family businesses passed down at death are subject only to estate tax and not an additional income tax. Instead, a business’s tax basis is increased or “stepped up” to fair market value, sparing the next generation a large capital gains tax bill.
President Biden wants to create a double death tax by eliminating the benefit of this step-up in tax basis, including for small businesses, farms and ranches passed down from one generation to the next at death.
More insidiously, the Biden plan would tax these businesses on simple inflation, sticking them with the bill for reckless inflationary tax-and-spend policies enacted by politicians in Washington.
Capital Gains Tax
For decades, Republicans and Democrats have recognized the importance of encouraging people to save for their future goals, including starting a business, saving for retirement, achieving financial independence, or buying a home or a car.
Members of both parties have long agreed on a key tool to encourage these goals for all Americans, specifically, a lower tax rate on long-term capital gains.
President Biden wants to nearly double this tax rate from 23.8 to 43.4 percent, which would be the highest rate in a century. In many cases, when combined with similar state taxes, the government would take more than half of an asset’s appreciation in taxes.
This is the appreciation that lower-income, middle-income and all income categories of workers and earners in the United States would have to pay. This supersized tax hike would be a powerful disincentive to small businesses, savers and retirees, and entrepreneurs and innovators who power our economy, and harm all Americans regardless of their financial circumstances or goals.
IRS Funding and Bank Monitoring
The Biden Administration has proposed nearly $80 billion in additional IRS funding, of which $72.5 billion would be accountability-hindering mandatory spending.
Nearly doubling the IRS’s budget, without increasing its accountability, opens the door to repeating and supercharging the Agency’s past abuses of power.
Further, the Administration’s proposal would press private-sector financial institutions into reporting deposit and withdrawal flows on their customers’ accounts of greater than $600 in value. Now think about that – this isn’t big corporations, it’s not even just corporations – it’s small businesses and individuals who have a financial account that have more than $600 in it.
What we’re going to see is a dragnet pulling law-abiding Americans into this, exposing sensitive data to future breaches, burdening financial institutions, and encouraging the growth of shadow banking. What a huge violation of the privacy of all Americans.
As if this proposal could not be worse, the data provided to the IRS would have almost no value in fighting tax evasion.
The era of big data should not be viewed as an opportunity for big brother.
SALT Deduction Cap
While my colleagues are proposing reckless, across the board tax increases on businesses and families, they are simultaneously proposing to expand a deduction for the wealthy living in high-tax states.
Democrats are fighting to reverse the cap on state and local tax, or SALT, deductions, stoking a tax break for the very wealthy.
Democratic silence on who benefits from their proposal is telling. Per a 2020 Brookings Institute study, 96 percent of its benefits would go to the top quintile of earners, 57 percent to the top one percent, and 25 percent to the top 0.1 percent. A huge tax break for the wealthy.
Price Controls on Pharmaceutical Manufacturers
Thanks to the genius of science, private sector innovation and the success of Operation Warp Speed, America is ready for its comeback.
Unfortunately, my Democrat colleagues are proposing sweeping government price controls on the very innovators who have enabled our return to normalcy.
Under the guise of negotiation, the government would be empowered to set a maximum fair price for drugs and apply bureaucratic standards that determine the value that cures and therapies bring to American lives. As the nonpartisan Congressional Budget Office has confirmed, this type of scheme would lead to fewer new medications, threatening access to lifesaving health care options for our most vulnerable citizens.
One of these forgone therapies could treat pancreatic cancer. Another could cure ALS. While every patient should be able to afford lifesaving medications, their proposal has the potential to eliminate the existence of these drugs entirely.
Congress should come together, in a bipartisan way, to make all health care services, including prescription drugs, more affordable and accessible.
And I’ve introduced legislation to do just that. We do need legislation to reduce the price of prescription drugs. But using the savings from these misguided price controls to pay for unrelated partisan priorities is not the answer to the high cost of care.
Before the pandemic, a combination of reduced regulatory burden and pro-growth policies, including the Tax Cuts and Jobs Act, helped to create one of the strongest economies of our lifetime, with all-time high median household income, a 50-year low unemployment rate, and real wage gains month after month, especially for low-wage workers.
Inflation-adjusted weekly median earnings grew 4.9 percent for the two years 2018-2019, the fastest two-year growth rate in real earnings since 1998-1999. Polling showed Americans’ general satisfaction at the highest level in 15 years.
We would do the American people a disservice if we mortgaged their future while undermining the foundations of their past successes.
Sadly, this is the approach some of my colleagues are seeking to take.
We should instead be building on time-proven, pro-growth policies, not reversing them to fund a reckless spending spree.
Source: Senate Finance Committee Republicans