Sen. Kyrsten Sinema of Arizona has reportedly joined fellow Democrat Sen. Joe Manchin of West Virginia in raising objections to President Joe Biden’s “Build Back Better” agenda — as it is currently structured.
“In the House, Democrats have proposed raising the corporate tax rate to 26.5% from 21%, moving the top individual rate to 39.6% from 37% and increasing the top capital-gains rate to 28.8% from 23.8%. Their plan would also add a 3% surtax on income above $5 million,” according to the news outlet.
“Losing the rate increases would punch a significant hole in the Democrats’ plans for funding the package, now expected to cost around $2 trillion over a decade. The House’s corporate tax rate increase was projected to raise $540 billion over a decade, while the tax rate increases on ordinary income and capital gains would raise nearly $300 billion,” the Journal added.
There is currently a 50-50 party breakdown in the Senate, meaning the Democrats must have both Sinema and Manchin in order to pass the Build Back Better legislation.
The Journal noted in another article that Sinema, as a House member in 2017, voted against the Republican Tax Cuts and Jobs Act, which brought brought the corporate income tax rate down from 35 percent to 21 percent and the top marginal income tax rate for individuals from 39.6 percent to 37 percent. (This rate applied to those making $518,400 or more in 2020.)
However, in 2018 “she was one of the few Democrats who voted to extend major portions of the individual tax cuts beyond their scheduled expiration date.”
Biden pitched his Build Back Better agenda in Scranton, Pennsylvania on Wednesday saying, “And the cost of the Build Back Better bill, in terms of adding to the deficit, is zero — is zero — zero because we’re going to pay for it all.”
Apparently referencing the proposed corporate tax increases, the president said, “I’m not anti-business, but I’m about, ‘Just begin to pay your fair share.’”
“You know, trickle-down economics has always failed. It hadn’t built this country,” Biden added.
Biden: “The cost of the Build Back Better bill in terms of adding to the deficit is zero, zero, zero. Because we’re going to pay for it all.” pic.twitter.com/sRqBLeD6sA
— Daily Caller (@DailyCaller) October 20, 2021
Top former President Donald Trump economic advisor Larry Kudlow cited the tax cuts model followed by Reagan and John F. Kennedy as the one the 45th president would follow and did.
Reagan and Kennedy argued that cutting taxes on businesses would lead to more economic growth and ultimately more revenue to the Treasury than at a higher, more punitive rate.
Further, the unemployment rate dropped in half under Reagan and under 4 percent for the latter half of the 1960s after JFK’s tax cuts became law.
Similarly, with the Trump tax cuts still in place, the Congressional Budget Office estimated in a report issued last week that revenue to the federal treasury hit an all-time high in 2020 and crossed $4 trillion for the first time in U.S. history.
The unemployment rate also hit a 50-year low in 2020, prior to the COVID pandemic.
The largest percentage increase in tax revenue came from corporate taxes, which were up 75 percent from 2020 to $370 billion, matching the record high of 2007, according to the nonpartisan Tax Foundation.
“In fact, corporate tax collections this year are about 25 percent higher than the $297 billion collected in 2017, prior to passage of [Tax Cuts and Jobs Act]. Likewise, as a share of GDP, corporate tax collections are higher this year (1.63 percent) than in 2017 (1.52 percent),” the Tax Foundation said.
U.S. corporate tax revenue hit an all-time high in 2021 pic.twitter.com/UfKVXXXEZl
— Tax Foundation (@TaxFoundation) October 12, 2021
Raising the corporate tax rate to 26.5 percent would take the combined federal and state rate to an average 30.9 percent, which would be the third highest among Organisation for Economic Co-operation and Development countries.
— Tax Foundation (@TaxFoundation) September 22, 2021
The Republicans previously brought the federal corporate tax rate down to 21 percent to make the U.S. more competitive on the world stage.
It seems likely Sinema’s stand against tax increases is out of concern of what negative impact they might have on the economy, and perhaps, it may be a political calculation — given Biden only narrowly carried Arizona by 0.03 percent.
Kudlow applauded Manchin and Sinema’s opposition to the Build Back Better legislation in its current form.
“There’s only two obstacles to this crazy $5 trillion-plus taxing and regulating and spending bill. One is Joe Manchin who is against the spending, and the other is Kyrsten Sinema who is against the taxing,” he told Fox News host Laura Ingraham Wednesday night.
“The two of them make a lovely couple,” he added. “They’re Washington’s most important power couple of the moment. They can stop this bill.”