Democrats know they are vulnerable on the tax issue with voters. They are the higher tax party and the Republicans are the lower tax party.
President Biden and congressional Democrats have pushed for tax increases relentlessly since last year. They are trying to impose new, higher taxes on energy production, personal income, capital gains, small businesses and American corporations. Meanwhile, Republicans oppose tax increases, support tax cuts for American families and individuals, and have proposed numerous tax cuts.
Because they desperately need a distraction on the tax issue, Democrats pretend that Republicans want to raise taxes. Mr. Biden repeated the claim in a major speech deflecting blame from inflation, and even the Washington Post called him out twice for the tax lies.
The left bases its misleading claim on a personal pamphlet published by a single Republican senator – Rick Scott of Florida – which has no support from other Republicans in Congress.
Mr. Scott published this as one of 128 points in his “Rescue America” pamphlet. This is the only proposal in his plan that deals with taxation. Mr. Scott says half the country pays no federal income tax and calls for them to be taxed so they have “skin in the game”.
The tax plank was hastily drafted and does not have the support of any other Republican. But it’s worth discussing the fallacy that lies at the heart of it.
There are many ways to get “skin in the game”. Using income tax as an indicator of “skin in the game” is as stupid as it is wrong. There are many reasons why a taxpayer may not earn enough to pay federal income tax in a year – for example, they may take time off to care for an elderly relative or to go to welding school.
Income tax is just one of the many ways a person pays taxes. Americans pay payroll taxes, including the 6.2% Social Security tax and the 1.45% Medicare tax.
They pay taxes on capital gains and dividends. They pay sales taxes on the purchase of many goods and services and pay taxes on the purchase of gasoline. They pay excise taxes on the purchase of alcohol and tobacco. And fishing rods, fishing tackle and guns.
Americans are also impacted by corporation tax. According to the Tax Foundation, 70% of corporate taxes are borne by workers, all Americans pay corporate taxes embedded in the price of goods and services.
Not only is the premise of Mr. Scott’s plan wrong, but the proposal undermines Trump’s tax cuts passed by Republicans, which removed 3.67million households from the income tax roll.
The tax cuts lowered taxes for Americans at all income levels, lowered tax brackets, doubled the standard deduction from $12,000 to $24,000 for a family, and doubled the child tax credit from $1,000 to $2,000.
This law resulted in deep tax cuts for taxpayers across the country, with Americans earning between $50,000 and $100,000 a year enjoying a 15% tax cut.
There are many proposals that Republicans support to build on this. For example, Republicans argue that these tax cuts, which are due to expire at the end of 2025, are permanent.
They support the expansion of tax-advantaged savings accounts such as 40(k), IRAs and HSAs. They support proposals to encourage economic growth and allow businesses to invest through the R&D tax credit and immediate spending.
They support the repeal of the death tax and the reduction of capital gains taxes.
Fortunately, there is no support for Mr. Scott’s clumsy ball point.
Senate Republican Leader Mitch McConnell said it would not become law, saying the GOP “will not have on its agenda a bill that raises taxes for half the American people.”
In its fact check, The Washington Post awarded the Biden’s assertion with three ‘Pinocchios’ – noting that ‘no legislation has been drafted and no other Republican lawmakers have announced their support’.
Since his tenure as Governor of Florida, Mr. Scott has been a leader in lowering taxes. He cut taxes every year as governor and supported tax cuts while serving in the Senate. Just last year, Mr. Scott wrote: “Tax increases are never the answer.
Yet his clumsy plank to impose income taxes on half the country undermines that leadership and efforts to make Trump’s tax cuts permanent.
Republicans support tax cuts that help the middle class while Democrats want to continue to burden the country with higher taxes and spending while giving the IRS invasive new power over households. It’s no wonder Mr. Biden is trying to distract voters with bogus claims about taxes.
• Alex Hendrie is Director of Tax Policy at Americans for Tax Reform.