The economy is reeling.
Inflation is increasing at the fastest rate in years. Supply chain problems are causing shortages and disruptions. Energy shortages are also spreading. Businesses across the country are struggling to survive.
This seems like a poor time to raise taxes on the economy.
Yet President Joe Biden and congressional Democrats are pushing the largest tax increase in 50 years. The taxes would join trillions of dollars more in government spending and government debt. Washington has already enacted $5.5 trillion in spending programs in the last 18 months. Trillions more in spending will only fuel more inflation. A $2 trillion tax increase will exacerbate growing supply and production problems.
According to economists surveyed by the Wall Street Journal, “uncomfortably high inflation will grip the U.S. economy well into 2022” as shortages put pressure on prices and curb output. The economists also cut their economic growth outlook in half, from 7.1% in July to 3.1% in the third quarter.
The supply chain problem is the biggest threat to growth, squeezing business and household budgets. Supply chain issues are hitting retailers, manufacturers, suppliers, and shippers. Shortages are spreading, and consumers are seeing higher prices and empty shelves. Again, the question has to be asked: Why would anyone think a tax increase is a good idea?
The best thing the president could do would be to stop pushing a massive tax increase. His proposed corporate tax rate hike would hit millions of businesses with one of the highest rates in the world.
Tax receipts are already soaring regardless!
Bruce Thompson was a U.S. Senate aide, the assistant secretary of the Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.
