Source: United States Senator for Ohio Rob Portman
August 3, 2022 | Portman Difference
WASHINGTON, DC – In a new Wall Street Journal opinion piece, Senator Portman, senior member of the Senate Finance Committee, details concerns with a new tax on manufacturing, or “book tax” in the Democrats’ latest reckless tax and spending bill. Portman discussed his concerns with the new tax hike, including the fact that it undermines business investment and job creation and raises prices for working families already facing skyrocketing inflation. Portman notes that the Democrats’ spending bill will negatively impact Americans in every tax bracket, with more than half the new taxes being levied on people making less than $400,000 a year, the threshold under which Democrats promised they would not raise taxes.
Portman discusses the far-reaching consequences of the tax on manufacturing in his op-ed, notably that about 200 American companies that employ nearly 20 million Americans will be affected by the book tax should it become law, which translates into lower wages at a time when wages are already struggling to keep up with inflation.
Read the full op-ed here. Excerpts below:
Schumer-Manchin Throws the Book Tax at U.S. Companies
By U.S. Senator Rob Portman
The Wall Street Journal
The Joint Committee on Taxation estimates that nearly 50% of this new book tax would fall on manufacturers—the effects of which could prove devastating. China currently has more than a quarter of the world’s manufacturing. Along with a majority of America’s competitors, China has no book minimum tax. Imposing this new tax on U.S. companies, and restricting certain U.S. manufacturers from writing off investments costs immediately, would make America less competitive and drive investment and jobs overseas.
This new tax would discourage investment just as policy makers have learned that our negative economic growth is in large part the result of lower investment. The latest report from the Bureau of Economic Analysis shows gross domestic private investment down 13.5%, which helped lower economic growth to minus 0.9% in the second quarter.
Higher taxes also mean lower wages for workers at a time when paychecks are lagging behind high inflation. The Joint Committee on Taxation estimates that 25% of corporate taxes fall on workers in the form of lower wages, and this is a conservative estimate. A 2017 Organization for Economic Cooperation and Development paper found the best studies estimated that between 30% and 70% of corporate taxes fall on workers.
Americans would also feel the effect of this tax hike in the checkout line. Economists at the University of Chicago and Northwestern found in a 2020 study that about 31% of corporate taxes fall on consumers. Companies with profits over $1 billion, which would be subject to this new tax, make a substantial portion of the products Americans buy and use every day.
An estimate from the National Association of Manufacturers suggests that this new tax would result in a real reduction in gross domestic product of $68.45 billion, with 218,108 jobs lost and a more than $17 billion dollar hit to wages in 2023 alone.
###