Save America. Kill the bill. The bill, of course, is Schumer Mansion Settlement Bill. Killing her will not be easy, but we will continue to do our best on policy grounds.
The more we know about this bill, the less everyone likes it. The “Reducing Inflation Act” does not appear to imply a significant reduction in inflation, according to Ben Wharton’s budget model.
It is not a supply-side model, but its results indicate that the effect on inflation is statistically indistinguishable from zero. Let me just say, there is no automatic correlation between budget deficit and inflation anyway. So, I never bought this argument.
The main cause of inflation is very easy money, and in this current cycle excessive federal spending has also contributed, but one of the killers of the economy besides very high inflation is the regulatory stifling that Biden woke up to the economy starting with fossil fuels, but it continues until now. Almost every business and industry.
Biden paid $200 billion in regulatory costs in his first year alone. This is more important than a bunch of bogus accounting tricks designed to cut budget deficits for a few years.
If you take a look at Reconciliation, there’s a $739 billion tax increase and $433 billion in spending, but Obamacare spending has only been recorded for three years. Over 10 years, it’s going to be more than $200 billion, wiping out about $150 billion in what’s called deficit reduction and the idea that we’re going to give the IRS another $80 billion which will generate another $124 billion in tax revenue, that game being tried over and over again, and it fails. over and over again, and it’s just more bogus bullshit.
Also, energy loans and loan guarantees are recorded as interest-bearing assets that make a lot of money. Good luck with that. Remember Solyndra? Or how did these student loans work? But the biggest thing is that the deficit-reduction audience kind of forgot to add the $280 billion of the unpaid CHIPS+ bill.
I’m sure it’s an oversight, but suddenly when you count last week’s congressional action, there’s roughly $900 billion in spending versus $740 billion in revenue, which seems like a deficit to me.
Feel free to check out my math, but more importantly this whole idea that 100% of business investment expenses is a tax loophole. it’s not. The reason taxable income is less than written corporate income is because you get a deduction by law, on purpose, in the 2017 Trump tax cuts, to allow for the immediate bonus deduction for new plant, equipment, technology, etc.
This was done to make America more competitive, to intentionally increase productivity, real wages, and typical family incomes, along with lowering the tax rate from 35% to 21%.
Those were the two main pillars of the supply-side business tax cut, and they worked. Average income has increased. Unemployment crashed. Poverty decreased. Inequality went down and there was no inflation and stripping from the pandemic shutdown, it paid for itself when the Laver Curve kicked in.
Schumer’s settlement bill would halt increased business investment. Fatal error! Because 70% of the corporate tax burden is borne by blue-collar workers, an alternative 15% tax on written income would result in overall tax increases.
According to the Joint Commission on Taxes, which is not friendly to suppliers, 50% of the burden of the minimum tax will hit manufacturers. Incidentally, today’s ISM manufacturing report fell to its lowest level since June 2020, but then, to varying degrees, every other industry will incur tax increases, including a 7.2% tax increase on coal, and a $25 billion tax increase on oil. And for that matter, fossil fuels in general and – get this – there’s a Green New Deal tax credit withholding. There is a shock!
There is also a withholding of a recoverable semiconductor tax credit, although the chip industry will be hit hard by the minimum corporate tax rate of 15%. What you give one hand the other hand takes.
Some other anecdotes, again from the Joint Committee on Taxes: People whose income is less than $10,000 a year will be hit hard with a 3.1% tax increase. People between the ages of $20,000 and $30,000 will get a 1.1% tax increase. People under the age of $100,000 will get a $6 billion tax increase. People who earn less than $200,000 a year will get a $17 billion tax increase.
Pretty much everyone gets a tax increase. What a joy! Just like Christmas in August. cool stuff.
Here’s a multiple-choice question: Will this tax increase make Economie a) more growth, or b) more stagnation? If you answer B, you will win the lottery. Next question: Will it generate approximately $900 billion in additional spending: a) higher inflation or b) lower inflation? If you answer B, you will also win the lottery.
But after the tax, after-inflation Basically, the lottery is not worth what they used to. For Heaven’s sake, save America, kill the bill.
This article is excerpted from Larry Kudlow’s opening comment on the August 1, 2022 edition of Kudlow.