Fact Check: Americans Need Solutions to Inflation, Not Higher Taxes
America’s inflation crisis is worsening and the White House still has no answers.
White House Claim: The way to bring down inflation is to raise taxes on American businesses and make them pay their fair share. New White House press secretary Karine Jean-Pierre struggled to justify this claim in answer to a question about how raising taxes could lower costs for everyday Americans.
Reporter: “How does raising taxes on corporations lower the cost of gas, the cost of a used car, or the cost of food for everyday Americans?”
White House: “So look I think we encourage those who have done very well especially those who care about climate change to support a fairer tax code that doesn’t charge manufacturing workers, cops, builders a higher percentage of their earnings than the most fortunate people in our nation and not let that stand in the way of reducing energy costs and fighting this existential problem, if you think about that as an example.”
Fact: Congressional Budget Office’s (CBO) analysis contradicts President Biden’s false claim that the Tax Cuts and Jobs Act (TCJA) led to less revenue from corporations and shows that revenue is even higher.
- A report from the CBO shows that corporate tax revenue is set to hit a new record of $454 billion – 22 percent higher than last year’s record.
Fact: Build Back Better would slow our economy, worsen our debt, kill 650,000 jobs over the long term, and cut workers’ paychecks, according to another new study.
- American Action Forum commissioned an updated analysis from Rice University on Democrats’ economic agenda and found that “the central conceit of ‘Build Back Better’ – that its higher taxes to finance new spending are pro-growth – is ultimately unachievable under any plausible scenario.”
Fact: As Karl Smith of Bloomberg Views writes, higher tax rates would make inflation worse:
“Higher tax rates discourage workers from taking on extra hours, or employers from making productivity-enhancing investments. These effects shrink supply and tend to make inflation worse.”
In fact, Smith continues, higher tax rates on corporations would also limit supply — the very thing we need more of to resolve inflation:
“Corporate income taxes are levied on earnings after accounting for payroll, supplies and depreciation of past investment. That leftover cashflow is what businesses use for expansion and new investment.
“Higher taxes would reduce it, discouraging expansion and decreasing supply. Higher corporate taxes would also reduce the profitability of new investments, further dampening the incentive to increase production. It’s true that less investment means less business spending, but because less investment also leads to less supply, the net effect could be to increase inflation pressures.”