As President Joe Biden travels the country complaining about the wealthy and corporations not paying their “fair share” due to the 2017 Trump tax cuts, which are still in effect, he might want to check out the latest revenue figures from the Congressional Budget Office.
The CBO estimated receipts to the federal Treasury topped $4 trillion for the first time in U.S. history during fiscal year 2021.
That was $627 billion more than the previous year, a staggering 18 percent increase.
It was also the largest jump since 1977, Politico reported.
Likely even more painful for Biden and his team to learn, the largest percentage increase in 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
So, Mr. President, those “greedy” companies are paying taxes after all.
— Garrett Watson (@GS_Watson) October 12, 2021
The president and his fellow Democrats like to harp on the Tax Cuts and Jobs Act as the prime example of former President Donald Trump’s reckless tax-and-spend ways.
“The reason we have to raise the debt limit is, in part, because of the reckless tax and spend policies under the previous Trump Admin,” President Biden says.
“In four years, they incurred nearly $8 trillion.” pic.twitter.com/M7uyFKXNM5
— MSNBC (@MSNBC) October 4, 2021
Their solution, as part of the $3.5 trillion so-called human infrastructure legislation, is to sock it to the “rich” and corporations.
Democrats want to raise the corporate tax rate from 21 percent to 26.5 percent.
When combined with state corporate taxes, the U.S. would have an average combined rate of 30.9 percent, the third-highest among Organisation for Economic Co-operation and Development countries.
The Trump tax cuts brought the federal rate down from 35 percent — then the highest in the industrialized world — to 21 percent. In other words, the Republicans wanted America to be competitive again on the world stage.
— Tax Foundation (@TaxFoundation) September 22, 2021
Left-leaning Politico noted that the latest revenue numbers throw a wrench in the Democrats’ talking point that the rich and corporate America aren’t paying the taxes they should.
“Though Democrats are hammering the rich for not paying their fair share in taxes, the increase is being driven by levies primarily paid by the well-to-do,” the news outlet reported.
“For example, corporate tax receipts leapt 75 percent, CBO says. At $370 billion, they easily top where they were immediately before Republicans slashed the corporate rate as part of the Tax Cuts and Jobs Act.”
You may ask, “How is it that revenues can go up after slashing taxes?”
Former presidents Ronald Reagan and John Kennedy explained why: By cutting taxes on businesses, it frees up more money from their total sales receipts.
Companies can then turn around and use that money to grow and to hire, which ultimately can generate more total tax revenue for the government than at a higher, more punitive rate.
“Every dollar released from taxation that is spent or invested will help create a new job and a new salary,” Kennedy said when pitching individual and corporate tax cuts in 1962. “And these new jobs and new salaries can create other jobs and other salaries and more customers and more growth for an expanding American economy.”
“Our goal must be full capacity and full employment and the budgetary surpluses that that kind of employment and capacity can produce,” he said.
After both the Reagan and Kennedy tax cuts, revenues to the federal Treasury doubled by end of the decade after the new rates were implemented.
Top Trump economic advisor Larry Kudlow cited the Reagan and Kennedy tax cuts as the model the 45th president would follow and did.
Kudlow told Fox News host Laura Ingraham Wednesday night, the new federal revenue numbers prove the Trump tax cuts worked.
“Lower taxes produce more revenues,” he said.
The record $4 trillion to the Treasury in 2021 also shows that the federal government does not have a tax rate problem — it has a spending problem.
If he does these two things, the economy will be strong and revenues robust.