Commentary: The list of tax hikes has just been voted on by the Democrats | Columnists

A $6.5 billion tax on natural gas that will increase household energy bills

The bill imposes a regressive tax on U.S. oil and gas development. The tax will drive up the cost of household energy bills. The Congressional Budget Office estimates that the natural gas tax will raise taxes by about $6.5 billion.

The tax hike violates President Biden’s tax pledge to any American earning less than $400,000 a year. Biden administration officials have repeatedly admitted that taxes that raise consumer energy prices violate President Biden’s $400,000 tax pledge.

A letter to Congress from the American Gas Association warned that the methane tax would represent a 17% increase in the average family’s natural gas bill. Democrats included a tax in the bill despite retail energy prices topping multi-year highs in the United States.

$12 billion crude oil tax that will increase household costs

With gasoline averaging over $4.00 a gallon across the country and only weeks away from record high prices, Democrats included a 16.4 cents a barrel tax on imported crude oil and petroleum products which will be passed on to consumers in the form of higher gas prices.

The tax hike violates President Biden’s tax pledge to any American earning less than $400,000 a year.

As noted above, Biden administration officials have repeatedly admitted that taxes that raise consumer energy prices violate President Biden’s $400,000 tax pledge.

As if that weren’t enough, the Democrats have indexed their oil tax increase to inflation. As inflation rises, the level of taxation also rises.

The nonpartisan Joint Committee on Taxation (JCT) estimates the provision will generate $12 billion in taxes.

A $1.2 billion coal tax that will increase household energy bills

The bill would more than double current excise taxes on coal production. Under the Democratic proposal, the tax rate on coal from underground mining would increase from $0.50 per ton to $1.10 per ton while the tax rate on coal from mining surface mining would drop from $0.25 per tonne to $0.55 per tonne.

JCT estimates that this will generate $1.2 billion in taxes that will be passed on to consumers in the form of higher electricity bills.

$225 billion increase in corporate income tax that will be passed on to households

Democrats have imposed an alternative minimum tax of 15% on income from financial statements of U.S. companies reporting $1 billion in profits over the past three years. These American companies employ millions of Americans.

The cost of this tax increase will be borne by working families in the form of higher prices, fewer jobs and lower wages.

A Tax Foundation report last December found that a 15% tax on books would reduce GDP by 0.1% and kill 27,000 jobs.

Preliminary cost estimates from the Congressional Budget Office found the provision would raise taxes by more than $225 billion.

According to JCT’s analysis, 49.7% of the tax would be borne by the manufacturing industry at a time when manufacturers are already grappling with supply chain disruptions.

The Tax Foundation also warned that current supply chain problems could be compounded by the disproportionate burden of the book tax on key industries. The report concluded that “the coal industry faces the heaviest minimum tax burden on the books, facing a net tax increase of 7.2% of its pre-tax book income, followed by automobile and truck manufacturing, which faces a 5.1% tax hike.

$74 billion stock tax that will hit your nest egg – 401(k)s, IRAs and retirement plans

When Americans choose to resell stock to a company, Democrats will impose a new federal excise tax that will reduce the value of household nest eggs. Rising taxes and restricting stock buybacks hurt the retirement savings of anyone with a 401(k), IRA, or retirement plan.

Union pension plans will also be affected.

The tax will put U.S. employers at a competitive disadvantage compared to China, which does not have such a tax.

Share buybacks help grow retirement accounts. Raising taxes and restricting redemptions would hurt the 58% of Americans who own stocks and the more than 60 million workers invested in a 401(k). Another 14.83 million Americans are invested in 529 college savings accounts.

Retirement accounts hold the largest share of corporate stocks, accounting for about 37% of the $22.8 trillion in outstanding US corporate stocks, according to the Tax Foundation.

In 2017, corporate-sponsored funds were worth $4.45 trillion in market value; union-sponsored funds accounted for $409 billion; and public funds, which benefit teachers and police, totaled $4.25 trillion.

When companies buy back shares, it is these investors who benefit. A tax on redemptions could deter companies from taking this action and negatively impact retirement savings.

95% federal excise tax on US pharmaceutical manufacturers

Democrats would impose a 95% excise tax on prescription drugs unless drugmakers agree to government price controls.

In effect, all drug manufacturers would either accept price controls or stop selling the drug in the US market altogether rather than pay the 95% tax.

This provision would restrict medical innovation in the United States and limit the supply of new drugs.

Price controls never work because they cause supply shortages. The CBO warned that the reduction in manufacturers’ revenues could reach $1 trillion over the next ten years and that it would “reduce research and development expenditure and thus reduce the introduction of new drugs”.

The CBO also underlines the “uncertainty” in the assessment of the number of new drugs whose marketing would be prevented. The agency has already revised its initial assessment to increase the number of drugs prevented from being introduced by 50%.

$52 billion income tax hike for medium-sized businesses and family businesses

As the U.S. economy slides into a recession, Democrats include a tax hike on midstream companies with reported losses. This provision widens the net of taxable income. Preliminary cost estimates from the Joint Committee on Taxation show the provision will raise taxes by $52 billion.

Senate Democrats passed an amendment to the bill ahead of its final passage that created a two-year extension to unincorporated taxpayer loss limits if the amount of the loss exceeds $250,000 ($500,000 in the case of a joint declaration). This provision was due to expire in 2026 under current law.

This provision would increase the taxes of a manufacturer, retailer or other capital-intensive business that suffers significant business losses each year due to the cost of salaries, rent, new equipment, inventory and interest payments.

Loss limitation was originally created by the Tax Cuts and Jobs Act passed by Congressional Republicans, but was used to offset the creation of the 20% deduction for intermediary businesses, resulting in a net tax reduction for those companies. Senate Democrats have now extended that loss limitation for two more years to pay for their reckless taxes and rampant spending. They did not extend the 20% deduction for intermediary companies.

This provision violates President Biden’s campaign pledge to small businesses: “Taxes on small businesses will not increase.”

Supersize the IRS to increase audits – $204 billion

The bill would spend $80 billion to supersize the IRS with 87,000 new officers and auditors and speed up audits on working households and small businesses. The IRS would perform an additional 1.2 million annual audits under the plan. Democrats say increased enforcement spending would net $124 billion.

The bill spends 14 times more money on “enforcement” – like small business audits – than on “taxpayer services” – like answering the phone. IRS employees only answer the phone “19 or 20 percent” of the time.