Inflation continues to soar, with prices increasing throughout the economy at a rate not seen in four decades. Compared to a year ago, consumer prices are up 8.5%, and wholesale prices are up 11.2%.
These price increases are hammering working families, wiping out wage gains and making workers worse off than they were a year ago, when prices were rising at only 2.6%. Yet despite this dismal record, President Joe Biden is pushing the reckless tax and spending policies. You know, the same policies which have helped make things this bad. The president blames everyone else for the soaring prices while continuing to push for more spending and higher taxes.
Biden claims his tax increases will reduce inflation. In fact, the Biden tax increases will make inflation worse.
Biden’s new budget calls for dozens of tax increases totaling more than $2 trillion. If enacted, these tax hikes would raise the cost of doing business. That would mean even higher prices for everyone else.
While the negative impact of corporate tax hikes on labor and capital is well known, new research shows that tax increases affect consumer prices as well. According to a National Bureau of Economic Research study, consumers pay for corporate tax increases through higher retail prices. The study found that “a significant portion of corporate taxes falls on consumers” through higher retail prices. It also found that corporate tax increases are more similar to sales taxes in their effect on prices, making them much more regressive than is commonly thought and more of a burden on lower-income households.
Put simply, Biden’s tax increases would increase inflation and harm our prospects for broader economic growth. Congress should reject them.
Bruce Thompson was a Senate aide, an assistant secretary of Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.
