U.S. Sen. John Thune (R-S.D.) today spoke out against President Biden’s proposed tax hikes, which would be detrimental to the American economy as it continues to recover from the COVID-19 pandemic. Thune warned that Democrats’ tax increases would cause working Americans to suffer the most and put American businesses at a disadvantage on the world stage.
Thune’s remarks below (as prepared for delivery):
“Mr. President, a few weeks ago, President Biden introduced an infrastructure plan.
“Or at least that’s what Democrats are calling it.
“In fact, a substantial portion of this bill goes to Democrat priorities that have nothing to do with infrastructure – from support for big labor to a new Civilian Climate Corps to advance ‘environmental justice.’
“Mr. President, President Biden’s infrastructure proposal would cost a lot of money – well north of $2 trillion.
“So how does the president plan to pay for this legislation?
“Unsurprisingly, the president is proposing tax hikes – notably a substantial hike in the corporate tax rate.
“Mr. President, there are two sources Democrats like to go to when it comes to paying for their spending – corporations and prosperous Americans.
“In fact, Democrats tend to speak about corporations and well-off Americans as if they are a bottomless source of funding for government programs – and as if Democrats can endlessly hike taxes on these individuals and businesses without consequences.
“When Republicans object to the prospect of major tax hikes, Democrats cry that Republicans are just protecting wealthy corporate cronies – a deeply ironic charge when you consider that Democrats want to include a tax cut for wealthy Democrat donors and Hollywood types in this same infrastructure package.
“The real reason for Republicans’ concern, of course, is quite different.
“Republicans are concerned about substantial tax hikes on any individual or business because we know that taxation has economic consequences.
“It’s something that Democrats should know as well – it’s basic economics, after all – but they don’t seem capable of grasping it.
“Taxation has consequences. Tax hikes have consequences. And big tax hikes have big consequences – usually negative ones.
“The corporate tax hike Democrats are talking about will have negative consequences for American businesses.
“And that means it will have negative consequences for American workers.
“And that’s a problem.
“Mr. President, three years ago, Republicans passed major tax reform legislation.
“Along with substantial tax cuts for middle-class Americans, this legislation cut America’s corporate tax rate.
“Well, at the time we passed this legislation, the United States had the highest corporate tax rate in the developed world, plus an outdated international tax system.
“Both of those things put U.S. businesses at a major disadvantage next to their foreign counterparts.
“And they discouraged foreign companies from moving to and investing in the United States.
“Our outdated tax system had also resulted in a wave of inversions – that’s tax-professional speak for companies moving their headquarters overseas.
“According to Bloomberg, between 2004 and 2016, thirty-six American-based companies inverted.
“Needless to say, those inversions resulted in a loss of American jobs and domestic investment.
“A piece in the Wall Street Journal reported that one accounting firm estimates that the U.S. lost $510 billion from cross-border mergers and acquisitions between 2004 and 2016.
“Republicans knew that if we wanted to boost job creation here at home and improve opportunities for American workers, we needed to address the high corporate tax rate and put American companies on a more competitive footing internationally.
“And so we cut the corporate tax rate and brought the U.S. international tax system into the 21st century by replacing our outdated “worldwide” system with a modernized territorial tax system.
“And it didn’t take long to see the results.
“Economic growth outstripped predictions.
“The poverty rate dropped.
“In fact, income growth in 2019 was the highest ever recorded, and real median household income for African-American, Hispanic, and Asian-American workers hit record highs.
“In other words, Mr. President, tax reform worked.
“And, importantly, it worked for the very people Republicans wanted to help – ordinary Americans.
“By improving the tax situation for American businesses, we improved the job and income situation for American workers.
“But now Democrats want to undo all that.
“To pay for their preferred government programs, they want to substantially hike the tax rate on American corporations – once again putting American businesses at a substantial disadvantage next to their foreign competitors.
“If Democrats impose President Biden’s suggested tax hike, the combined average top tax rate on corporations in the United States would be higher than that imposed by every one of our major trading partners and competitors, including China.
“It’s difficult to understand why Democrats think it’s a good idea to put American companies at a disadvantage next to Chinese companies – and next to British companies, Japanese companies, French companies, German companies … the list goes on.
“It’s especially difficult to understand why Democrats would do this now – just as our economy is trying to recover from the serious hit it took from the coronavirus.
“Unfortunately, Mr. President, it’s become clear that Democrats are either incapable of grasping or don’t care about the economic consequences of their proposed tax hikes.
“Democrats are fixated on imposing a whole host of new government programs, and they’re ready to tax Americans, and American businesses, to pay for them – even if ordinary Americans suffer as a result.
“Presumably they think that if ordinary Americans start suffering, they can just offer them some help through a new government program.
“But I’m pretty confident that most Americans would exchange government assistance for the kind of job and income that frees them from having to depend on government programs.
“Substantially increasing the corporate tax rate – and putting American businesses at a disadvantage on the global stage – is not the best way to encourage the creation of those kinds of jobs.
“Mr. President, hiking the corporate tax rate will have negative consequences for our economy – and for hardworking Americans.
“And apparently this tax hike is just the beginning.
“President Biden and his Democrat colleagues have a lot more government programs they want to push, and they have a whole raft of tax hikes waiting in the wings to fund them:
“A hike in the top individual income tax rate that would hit small businesses hard.
“A hike in the capital gains tax, which would discourage investment and decrease the value Americans can expect from their 401ks.
“A new death tax that would hit middle-class families and family farms and businesses.
“These tax hikes may help Democrats usher in parts of the socialist fantasy they’ve been envisioning.
“But they will do nothing to help American families gain financial stability and secure good jobs and lasting, rewarding careers.
“Working Americans will ultimately suffer the most from Democrats’ tax hike plans.”