On Tuesday, a story ran that showed that tax information about Elon Musk, Michael Bloomberg, George Soros, and others was leaked by the Internal Revenue Service (IRS). The story was supposed to be a “hit piece” about how low of a percentage of taxes these people paid in taxes. The leak showed the tax code was actually followed and no laws were broken. Well, that’s not true, leaking the information is against the law, so at least one law was broken. This leak reminded me of the IRS Lois Lerner years when conservative organizations were targeted. This better not be the beginning of more politicization of the IRS. The IRS handles sensitive information on every taxpayer in America; their inability to prevent a leak like this is deeply concerning and requires an immediate investigation. The Taxpayers Protection Alliance (TPA) is demanding a full investigation. Private citizens can’t live in fear that their personal tax information can be leaked without legal repercussions.
Infrastructure Week
Stop me if you’ve heard this one before, this past week was supposed to be infrastructure week. Department of Transportation Secretary Pete Buttigieg and the White House said that they wanted a frame work for an infrastructure package in place by June 7th, this past Monday. Well, Republicans negotiated with the White House and a deal wasn’t struck. The White House wanted a $1.7 trillion package with items that were clearly no related to infrastructure. The Republicans proposed an alternative package that comes in at just a hair under $1 trillion. The White House wanted tax increases to pay for the package, the Republicans said no tax increases. So, where do they go from here? Yes, there are infrastructure needs in this country, but at this point, no deal is better than a bad deal. During the debate, there were two major hang-ups between the two sides. The first is the scope and price tag. While Republicans have proposed a very narrowly tailored package focused on traditional infrastructure needs, Democrats wanted to include a variety of provisions unrelated to what one would normally think of as infrastructure – unless you are Sen. Kirsten Gillibrand (D-N.Y.). This “new” infrastructure includes electric vehicle subsidies and child care. The other discrepancy settles on how the package will be paid for. Democrats have included a number of tax hikes proposed by the Biden administration.
Republicans have proposed using the hundreds of billions of dollars of COVID relief funds that were left unspent to pay for any infrastructure bill. While the Democrats did come down on their initial asking price, this does not tell the whole story. At the same time the administration knocked $600 billion off its asking price, there were conversations about adding the administration’s American Families Plan to the package, which would bump it up to a $4 trillion package. It is very difficult to believe the administration is a trustworthy negotiating partner when this prospect looms over the discussions. Those wondering what the American Families Plan has to do with infrastructure are not alone. This plan would subsidize higher education, create a universal pre-K program, extend relief checks beyond the end of the pandemic, and provide free community college. This is a $2 trillion welfare bill that the administration wants to shepherd through under the guise of infrastructure, hoping American taxpayers won’t notice.
The negotiations on the infrastructure package were not as cut and dry as the political talking heads would have you believe. It is very complex. With arbitrary deadlines set by bureaucrats like Pete Buttigieg and a series of red lines by the administration and congressional leadership, it is no mystery why the negotiations failed. If profligate spending and tax hikes aren’t taken off the table, future infrastructure packages should be doomed for failure.
Global Corporate Minimum Tax
The Biden administration is absolutely obsessed with raising taxes. In particular, Biden has corporate taxes in his sights. It may make for good sound bites for progressives to want to tax the “fat cats,” we all know that companies pass through any tax increases to consumers through higher prices.The Tax Cuts and Jobs Act slashed the corporate tax rate from 35 percent (nearly 40 percent with state corporate taxes) to 21 percent, spurring businesses to hire more workers, raise salaries, and expand operations. If the Biden administration has its way and rates are raised again (this time in lockstep with other countries), the bad old days of slow economic growth may soon be back. This destructive global effort will not only stymie wage and hiring growth, but also ensure the demise of international tax competition that has kept rates from rising. For the sake of billions of taxpayers and consumers around the world, President Joe Biden and his international partners must refrain from raising the corporate tax rate. As economies around the world are finally beginning to recover from the pandemic, the U.S. and other nations within the Organization for Economic Cooperation and Development are actively pursuing a high-tax, low-growth agenda. Last week, the Treasury Department announced that companies should pay a 15% tax on their earnings regardless of where they are located.
While a 15 percent minimum rate may not sound terrible to U.S. corporations who now pay a 21% tax, this “floor” is likely only the beginning. According to the Treasury, “discussions should continue to be ambitious and push that rate higher.” If this global minimum corporate tax rate is set at, say, 25% (in line with Biden’s views on the proper domestic rate) then much of the developed world would see a tax hike. Nations such as the U.S., England, Denmark, Sweden, and Norway would all have to raise the cost of doing business within their borders. And according to a large body of research, this rigid tax regime would result in higher prices, smaller paychecks, and lower prosperity across the board. Tax Foundation president Scott Hodge and adjunct scholar Bryan Hickman note that “lost wages represent a disproportionate share of the corporate income tax burden, with most studies finding that share to be 70 percent or higher.” In the short term, this means that workers would see their pay go down after more than a year of dealing with coronavirus-related cuts and unpredictable compensation. Over the longer run, businesses would likely adjust by hiring fewer workers and ditching their expansion plans. Economists have long pointed out that companies are loath to cut wages for fear of demoralizing their workforces. As a result, corporate tax rates ultimately succeed only in halting hiring and swelling unemployment lines everywhere.
The idea of a global minimum corporate tax is particularly devastating for countries of the developing world. While OECD membership is largely limited to developed nations, setting a high tax floor as a condition for entry into the club is an unnecessary deterrent to growth and industrialization. Companies are naturally reluctant to relocate to nations with checkered histories of corruption and wanton violence. Countries looking to turn the page on the past can overcome this stigma by setting taxes and regulations low. A worldwide minimum corporate tax rate would be devastating to all countries involved, with the “bottom billion” hit especially hard. Instead of charting a course for ever-higher taxes, Biden should use his global clout to push for further tax relief and reform. No country needs to win this “race to the top” with onerous tax rates.
BLOGS:
Monday: Nicotine Flavor Ban; a Lesson in Why a Bill Should Not Become a Law
Tuesday: Taxpayers Beware of Getting Run Over During Infrastructure Week
Tuesday: TPA Sends Letter to Senators, Urging Opposition to US Innovation and Competition Act
Wednesday: USPS Can Continue to Deliver…without Charging a Fortune for Stamps
Friday: House Antitrust Package is Anti-Consumer
MEDIA:
June 3, 2021: The Daily Mail quoted TPA in their article, “Biden CAVES on corporate tax hikes, offers to keep 2017 cuts and proposes minimum rate of 15%.”
June 4, 2021: The Delaware Valley Journal (West Chester, Pa.) quoted TPA in their article, “Biden’s Billion-Dollar Push for EV Charging Stations Just an Opening Bid.”
June 4, 2021: I appeared on “The Lars Larson Show” (nationally syndicated) to discuss the global minimum corporate tax.
June 4, 2021: Patch quoted TPA in their article, “Biden's Billion-Dollar Push For EV Charging Stations Just An Opening Bid
June 5, 2021: The Washington Examiner (Washington, D.C.) quoted TPA in their article, “Democrat's hope fades for socialized medicine this year.”
June 7, 2021: WBFF Fox45 (Baltimore, Md.) interviewed me about a proposal for guaranteed income in Baltimore.
June 7, 2021: VP of Policy Patrick Hedger appeared on the Charlie James Show on 106.3 WORD FM (Greenville/Spartanburg, S.C.) to discuss the global minimum corporate tax.
June 7, 2021: TPA was quoted in an Inside Sources op-ed titled, “Joe Biden’s Billion-Dollar ‘If You Build It, They Will Drive’ EV Charger Strategy.”
June 7, 2021: Townhall.com ran TPA’s op-ed, “Taxpayers Beware of Getting Run Over During Infrastructure Week.”
June 7, 2021: The Center Square ran TPA’s op-ed, “Finally, FDA is fighting back against Alzheimer’s.”
June 7, 2021: WBFF Fox45 (Baltimore, Md.) quoted TPA in their story, “Group calls for independent audit board to oversee City's federal relief spending.”
June 8, 2021: TPA was quoted in a Prescott eNews op-ed titled, “Joe Biden’s Billion-Dollar ‘If You Build It, They Will Drive’ EV Charger Strategy.”
June 8, 2021: VP of Policy Patrick Hedger appeared on Wall to Wall on One America News to discuss the global minimum corporate tax.
June 9, 2021: The Galion Inquirer (Mt. Gilead, Ohio) ran TPA’s op-ed, “FDA is fighting back against Alzheimer’s.”
June 9, 2021: VP of Policy Patrick Hedger appeared on the Steve Gruber Show (National online & radio) to discuss the global minimum corporate tax.
June 9, 2021: VP of Policy Patrick Hedger appeared on The Ross Kaminsky Show on KHOW (Denver) to discuss the global minimum corporate tax.
June 9, 2021: VP of Policy Patrick Hedger appeared on Delmarva Live (Delaware) to discuss the global minimum corporate tax.
June 9, 2021: VP of Policy Patrick Hedger appeared on Rush to Reason on KLZ (Colorado) to discuss the global minimum corporate tax.
June 10, 2021: WBFF Fox45 (Baltimore, Md.) interviewed me about the economic fallout from the violence in Fells Point.
June 10, 2021: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about the IRS illegally releasing tax return.
June 10, 2021: The Livingston Parish News (Denham Springs, La.) “Biden’s outrageous budget a chance for GOP to regain spending credibility.”
Have a great weekend!
Best,
David Williams
President
Taxpayers Protection Alliance
1401 K Street, NW
Suite 502
Washington, D.C. xxxxxx
www.protectingtaxpayers.org
