Inflation is at its highest level since November 1981 – a staggering 9.1 percent. The last time it was this high, Indiana Jones and the Raiders of the Lost Ark had recently been released. Everywhere South Dakotans look, they’re facing price increases. On average, inflation is costing the average household $718 per month, or more than $8,600 over the next year. That is an unsustainable financial burden for families and small businesses. And on top of all this, real average hourly earnings are currently declining at the fastest pace in 40 years.
A growing number of Americans are digging into their savings to make ends meet, and others are relying on things like credit cards or visits to food banks. Yet, even as inflation continues to climb and affect families and businesses across the state, Washington Democrats are preparing to double down on the same kind of irresponsible government expansion they’ve already committed to with a partisan, multi-trillion-dollar tax-and-spending bill.
At its most basic level, inflation is created when there are too many dollars chasing too few of goods in the economy. Democrats helped trigger this ongoing inflation problem last year when they decided to pour trillions of unnecessary government dollars into the economy – despite being warned by me and many others that their partisan $1.9 trillion spending bill would stoke inflation. At this point, after months of record-high prices, the logical solution would be to stop all of this wasteful spending. Unfortunately, Democrats still believe that flooding the economy with more government dollars will help fix the inflation crisis. Newsflash: It will only make things worse.
Like a zombie, the Democrats’ Build Back Better tax-and-spending spree just keeps coming back from the dead. Democrats are planning to raise taxes by a trillion dollars. A substantial part of that tax increase would come in the form of new taxes on small businesses – individually and family-owned businesses, or what are often called pass-through businesses. In South Dakota, pass-throughs, such as sole proprietorships, S corporations, and partnerships, employ an estimated 68 percent of the private sector. Nationwide, more than 90 percent of American businesses are pass-throughs, and these businesses employ tens of millions of Americans.
Right now, business owners are struggling with the high cost of everything from inputs to electricity. I recently read a comment from one small business owner in South Dakota, who noted that “it’s hard when you’re working so hard but you’re not making money. […] we are right there right now.” If Democrats have their way, life for small business owners – and their employees – is going to get even harder. Raising taxes on businesses would lead to a combination of lower wages for workers, lower returns for business owners, and higher prices for goods and services. It would also make it more challenging for small business owners to reinvest in and grow their businesses.
The Democrats’ proposed tax hikes and the resulting economic impacts are not going to be limited to small businesses, nor are they going to be limited to families bringing home more than $400,000 – despite the fact that the president has repeatedly pledged not to raise taxes on families making less than that. A recent analysis by the nonpartisan Joint Committee on Taxation showed that lower- and middle-income taxpayers will face significant hits from the Democrats’ proposed tax hikes, and more than half of taxpayers earning between $100,000 and $200,000 would see a tax hike next year, as well as a quarter of taxpayers making between $75,000 and $100,000.
Raising taxes on small businesses, including pass-throughs in South Dakota and across the country, is a reckless approach to the economy. I am at a loss to understand any legitimate reason why Democrats would be contemplating increasing the tax burden on small businesses and middle-income Americans during an inflation crisis. American families are already suffering, and they should not have to deal with the economic consequences of yet another ill-advised piece of Democrat legislation.
I will continue to fight on behalf of South Dakota families and small businesses to stop this irresponsible and partisan tax-and-spending spree from becoming law.
