Congressional Democrats and 13 House Republicans passed a $1.2 trillion “infrastructure bill” last week. About 20 percent of the funds are for actual roads and bridges. The rest is filled with earmarks and other “woke” wasteful spending and lays the groundwork for a new vehicle miles traveled (VMT) tax.
Even worse for taxpayers, Democrats used this bill to buy votes for their reckless $2 trillion socialist tax and spend plan. This “reconciliation” bill will super-size the IRS and impose enormous tax increases on Americans as our country tries to dig out from the damage caused by the pandemic and government-ordered shutdowns.
The plan contains $800 billion in tax increases on American corporations that will be immediately passed along to working families through an increase in the price of goods and services. Americans are already seeing the highest level of inflation in three decades and these tax increases will only exacerbate this problem.
This plan would impose a 15 percent global minimum tax would make American businesses uncompetitive and could cost millions of jobs and tens of billions of dollars in U.S. investment, as noted in a study conducted by EY. It would also impose a 15 percent domestic minimum tax that would disallow companies from deducting the cost of new investments – an important provision that incentivizes economic growth.
Democrats are also proposing an 8 percent “surcharge” which would give the U.S. the highest individual rate in the developed world. Under their plan, the combined federal/state top individual income tax rate would be 57.6 percent, the highest in the Organization for Economic Co-operation and Development (OECD). Taxpayers in New York would pay a top tax rate of 66.2 percent, while taxpayers in California would pay a top tax rate of 64.7 percent.
Many small businesses organized as pass-throughs would be subject to these outrageous rates.
This tax would also increase the top capital gains tax to 37 percent, resulting in the U.S. having the third-highest capital gains tax in the developed world.
In a step toward socialized healthcare, Democrats want to impose price controls on American pharmaceutical manufacturers. If a manufacturer does not agree to government-set prices, they are hit with a 95 percent excise tax.
The Democrat plan also includes $80 billion to hire and deploy 87,000 new agents to audit and harass taxpayers. 87,000 is a large number of agents: That is more than the number of personnel serving on all 11 U.S. aircraft carriers. Enough to fill the ancient Roman Colosseum nearly twice.
Most of these new agents will join the IRS employee union, which gives nearly 100 percent of its political spending to Democrats.
The IRS funding would also be used to study the creation of a government tax preparation service that would replace the existing system of voluntary compliance, where Americans are responsible for filing out their own tax returns, with a system where the government assesses and files taxes for Americans.
Democrats are still pushing to have the IRS snoop on your bank account. Dems want to give the IRS automatic power to monitor and store data from all personal and business bank accounts and Venmo, PayPal, and CashApp accounts with more than $600 in total deposits and withdrawals. This plan, which the administration describes as a “comprehensive financial account reporting regime,” would inevitably increase audits on taxpayers making less than $400,000 per year.
Democrats have also included several tax giveaways for their special interests like big labor, green energy, and the media.
To appease Big Labor, the bill dictates that in order to receive $4,500 of the $12,500 electric vehicle credit, an EV must be union-made. The bill also includes an above-the-line deduction for up to $250 in “dues” to a labor organization. This deduction would be a distortionary tax policy that does little or nothing to help the majority of middle-class families.
To appeal to green donors, the bill includes a massive $12,500 tax credit for electric vehicles, as mentioned, and a credit equal to 30 percent of the cost of an “electric bicycle.” The plan also includes multi-billion-dollar grants and credits for the promotion of environmental justice, energy-efficient fixtures like windows and doors, and the “green workforce.”
The bill even includes a tax giveaway to reporters, or the ‘Fake News Tax Credit.’ The proposal creates a tax credit for “local newspapers” with up to 1,500 employees – a largely left-of-center group of workers. It gives an employment tax credit of up to $12,500 per person for reporters at “eligible” news companies. Most newspapers in the country have fewer than 1,500 employees. This tax handout would be shoveled to large corporate newspapers as well as television and radio companies.
Moderate Democrats demanded in a letter that the tax-and-spend reconciliation plan be scored by the CBO and released at least 72 hours before a vote. It was because of those efforts that the infrastructure bill was passed before reconciliation. Simply being able to read the bill and know what it does should be the bare minimum requirement for legislation to be voted on – yet only five House Democrats demanded those conditions.
While the just-passed infrastructure bill contained wasteful spending, if Democrats have their way it would be just the beginning. Their next bill includes trillions in new tax increases and socialist spending, supersizes the IRS, and gives away billions to leftist special interest groups.
