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Chairman Smith: Americans Can’t Afford the Tax Hikes Planned for Tonight’s State of the Union Speech

March 7, 2024 — 'Inflation Reduction Act'    — Blog    — Press Releases    — Select Revenue Measures    — Tax   

Washington, D.C. – With reports that President Biden will use Thursday’s State of the Union Address to propose new tax increases, Ways and Means Chairman Jason Smith (MO-08) issued the following statement:

“President Biden tonight plans to make clear he’s on the side of higher taxes and more corporate giveaways. These proposals will kill jobs, hurt families and small businesses, and put America at a disadvantage to Communist China. As we have said every time he has proposed these tax increases before, they are dead on arrival. President Biden’s State of the Union address is a giant tax bill no American can afford.”

The Details:

Workers Will Suffer with Democrats’ Higher Corporate Tax Rate

  • President Biden has frequently called to repeal the 2017 tax reform, including increasing the corporate tax rate from 21 percent to 28 percent – but this falls on workers according to the non-partisan Joint Committee on Taxation (JCT), who affirmed in congressional testimony that corporate tax rate hikes hit “labor, laborers.”
  • According to the Tax Foundation, workers bear an estimated 70 percent of the corporate income tax. 
  • This corporate tax increase would make America’s taxes higher than Communist China’s 25 percent – in fact, the Chinese government allows strategically important industries to pay even lower rates of 15 percent or 10 percent.
  • After adding state corporate income taxes, the combined federal-state rate under Biden amounts to about 32 percent, leaving American companies with a higher tax burden than our competitors and adversaries.

Read: Analysis: Biden Tax Hikes Hit Middle Class

Wealthy and Well Connected Corporations Reap Massive Benefits from Democrats’ Green Subsidies

  • President Biden is likely to propose doubling down on the Inflation Reduction Act (IRA), whose primary beneficiaries are billion-dollar corporations and big banks, according to analysis by the JCT. These tax breaks are a massive transfer of wealth from working-class families to Wall Street and big business.
    • Companies with over $1 billion in sales receive more than 90 percent of special interest tax subsidies for green energy.
    • Banks and insurers receive over half of these tax breaks, and more than three times as much as any other industry.
    • New tax credits for luxury electric vehicles (EV) will predominantly benefit the wealthy as nearly 80 percent of EV credits flow to households earning six figures.
  • Economists have released estimates dwarfing the JCT’s original $271 billion total price tag for Democrats’ so-called Inflation Reduction Act (IRA) special interest tax breaks. In fact, the JCT even updated its score recently, showing the costs more than doubling to $664 billion.

Read: Factsheet: As Cost of Democrats’ Green Corporate Welfare Skyrockets, Big Business and China Profit (UPDATED)

Biden’s Made-in-America Tax (Book Minimum Tax) Is Already a Failure

  • The IRS has struggled to implement President Biden’s new tax disproportionately hitting American manufacturing. 
  • Yet, politically connected companies get a special carve out from this tax.
    • Luxury electric vehicles are carved out: Automakers get over $100 billion in taxpayer subsidies when taxpayers earning up to $300,000 a year buy from them. 
    • Silicon Valley subsidies are carved out: Tech companies producing semiconductors received a special carveout so they can take their $24 billion in new taxpayer subsidies right to the bank.
    • Green energy corporations are carved out: Big Wind and Big Solar collect as much as $250 billion in new federal tax credits over the long term, more than doubling the total cost of federal handouts to wind and solar. Additionally, green tax provisions are artificially carved out from Bidens failed Book Minimum Tax. 

Read: FACT CHECK: Inflation Reduction Act Loaded with Special Interest Giveaways

Democrats Continue Pushing a Global Tax Surrender, Making It Better to Be a Foreign Worker or Company than an American One

  • Proposals confirm what Republicans have warned – the Biden Administration’s global tax surrender will favor foreign countries like China while American companies and workers pay higher taxes.
  • In meetings with officials from the Organization for Economic Co-operation and Development (OECD) and the governments of France and Germany, Ways and Means Republicans presented the impact of the deal on the U.S. economy, including how it would give foreign competitors like China an advantage and cause the United States to forfeit over $120 billion of tax revenue over the next decade. The Ways and Means delegation also explained that the Biden Administration lacks constitutional authority to write U.S. tax laws.

Read: Ways and Means Members to European Officials: Americans Reject Biden’s Global Tax Surrender

Even More Audits on the Middle Class with Even More Funding for the IRS

  • President Biden and congressional Democrats initially handed $80 billion to the IRS, an agency with a history of targeting conservatives.
    • Money was supposed to hire 87,000 new employees to return audit rates to 2010 levels – an increase of audits on families making less than $400,000.
    • Returning to 2010 audit rates means more than 1 million additional audits per year with more than 600,000 new audits for taxpayers making less than $75,000.
    • 87,000 new agents would more than double the size of the IRS, giving the agency more employees than Border Patrol agents, the FBI, State Department, and Pentagon combined.
  • On top of the $80 billion in the IRA, the Biden Administration requested another $43 billion in its FY24 Budget for the IRS, 91 percent of which would go toward more operations and enforcement.
  • Republicans’ Fiscal Responsibility Act, which passed the House in 2023, zeroed out the IRS’s enforcement budget and prevented new agents from being hired for FY2023. 

Read: Reminder: IRS Funds Were Originally Intended By Extremist Democrats to Increase Audits on Lower- and Middle-Income Earners