One of my favorite elements of Sen. Tim Scott's excellent RNC speech on Monday was his strong defense of the GOP-passed tax reform law, a true achievement in which he played a major role. Democrats have lied incessantly about the law, which reduced tax rates at every income level, helped spur economic growth, and finally delivered long-awaited wage increases. The new policy, along with deregulation, was one of the major reasons that the economy was so strong prior to the pandemic-induced economic shutdowns. While the opposition endlessly frames the effort as a giveaway to large corporations and the rich, that's an unfair and inaccurate assessment, and Scott took them to task several times during his primetime remarks:
Later in life, I started my own successful small business. That's why I know it is critical for us to have a tax code that encourages growth. We actually saw revenues to the Treasury increase after we lowered taxes in 2017. Rest assured, Democrats do not want you to know that! President Trump built the most inclusive economy ever. 7 million jobs created pre-COVID-19, two thirds of which went to women, African-Americans and Hispanics... We put hard earned tax dollars back in people's pockets by cutting their taxes, especially for single parent households like the one I grew up in - cutting single mother's taxes 70% on average. President Trump supported these tax cuts for those single moms, and other working families, and signed these policies into law, and our nation is better off for it...Joe Biden wants to come for your pocketbooks.... Unless you're a blue state millionaire. I'm serious -- that's one of their solutions for the pandemic. They want more money you're your pocket...going to help Manhattan elites and Hollywood moguls get a tax break. Republicans, however, passed President Trump's once-in-a-generation tax reform bill that lowered taxes for single moms, working families and those in need.
It is a fact that federal revenues increased after taxes were cut, thanks to a thriving and growing economy. It is a fact that the tax reform legislation reduced rates across the board, and slashed taxes for an overwhelming majority of Americans -- especially working and middle-class earners. It is a fact that Democrats are pushing a blue state tax cut for the rich, dressed up as COVID relief. And it is a fact, as other convention speakers noted, that in the pre-virus economy, wage growth grew fastest for working Americans. On the other side of the equation, Joe Biden is vowing to raise taxes on most Americans.
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In his acceptance speech last week, he promised this would only apply to people earning over $400,000 annually (such false assurances might sound familiar to those who lived through the Obama-Biden administration), but that's not true. According to an analysis from the nonpartisan Tax Foundation, Biden's $3.2 trillion tax increase package would reduce incomes, reduce GDP growth, and kill jobs:
According to the Tax Foundation General Equilibrium Model, Biden’s tax plan would reduce the economy’s size by 1.51 percent in the long run. The plan would shrink the capital stock by 3.23 percent and reduce the overall wage rate by 0.98 percent, leading to 585,000 fewer full-time equivalent jobs...taxpayers in the top 1 percent would see their after-tax incomes reduced by around 13.0 percent due to higher taxes on income above $400,000. However, taxpayers in other income quintiles would also see a reduction in their after-tax income. The reduction in income for the bottom four income quintiles is mainly due to the increased tax burden on labor from higher corporate income taxes.
The more left-leaning Tax Policy Center confirmed that under the Biden plan, "the proposals would increase taxes on average on all income groups, but the highest-income households would see substantially larger increases." The right-leaning American Enterprise Institute reached the exact same conclusion: "Biden’s proposals would increase taxes, on average, for households at every income level." Yes, the rich and job creators would get hit hardest, but every income group would get hit. Will working and middle-class people feel good about their reduced income and higher tax burden just because rich people are being forced to pay even more? Finally, in a study cited during RNC speeches last night, Wharton analysts at Penn determined that Biden's proposed policies would reduce economic growth, would reduce hours worked, and that over 85 percent of all taxpayers would see a net tax increase.
The only income group in which a majority of people would not see an increase is the bottom quintile (lowest 20 percent) of earners -- but even among this group, nearly one-third would see a tax hike. Among all other income groups, between 93 and 100 percent of earners would experience a tax increase. The previously-robust US economy has been wrenched by a virus that originated in China and was covered up by the Chinese Communist Party. Joe Biden opposed the president's common sense travel ban, and now wants to undermine businesses and workers by raising their taxes and increasing the cost of doing business -- which will make it harder for struggling companies to add jobs. Does that sound like a winning strategy to "build back better"?
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