Op-Ed: Democrats’ tax-and-spend agenda
threatens taxpayers and Iowa’s economy
[The Center Square] Pete Sepp and John
Hendrickson
Iowans are known for being plain-spoken and
clear-thinking. Perhaps that’s why President Joe Biden’s approval rating
in Iowa has recently sunk to a dismal 31%. Afghanistan and COVID-19
notwithstanding, another of the Biden Administration’s promises that
seems to have failed the believability test is his insistence that
middle-class Iowans won’t be hurt in the pocketbook by his $3.5 trillion
budget blueprint. Iowans are right to be skeptical.
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This week, Speaker Nancy Pelosi and her fellow leaders in the
U.S. House of Representatives are rushing to the floor a budget plan containing
retroactive tax hikes, even as inflation has roared to its highest level in well
over a decade and the jobs picture remains unclear. Is now really the right time
to double down on tired old tax-and-spend policies that could worsen these woes?
Among them:
-
Imposing new limits on the 20% small
business deduction;
-
Increasing the basic capital gains tax rate
from 20% to 25% (nearly 29% with new surtaxes);
-
Hiking the corporate tax rate from 21 to
26.5%;
-
Instituting a new tax on vaping products,
which many use to quit smoking; and
-
Creating heavier death tax burdens.

Supporters might counter that many of these proposals are limited
to high earners or big businesses, but Iowans know better. Congress’s own
scorekeeper, the Joint Committee on Taxation, estimates that $100 billion of the
corporate tax hike would be borne by those with incomes of below $100,000 in the
form of lower wages, higher prices, and fewer jobs. Further, the Committee
estimates that by 2027, the average taxpayer making $30,000 or more would see
their taxes rise. And when “the rich” pay a higher tax on investments, the
after-tax value on stocks could drop, and that will impact millions of IRAs,
401(k)s, and college savings accounts.
Other harmful schemes could still find their way into the House
bill. The Biden Administration’s proposed punitive taxes on oil and gas
producers could drive up energy prices, affecting not just gasoline and diesel,
but also the cost of everyday products like food and clothing.
Biden and Congress seem oblivious to this problem. They are
considering measures that would repeal century-old provisions in the law which
allow oil and gas producers to deduct the costs of their operations just like
companies in other industries.

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Although Sen. Joni Ernst persuaded colleagues in her
chamber to pass her amendment barring any federal methane reduction
mandates that would increase livestock costs, Iowans are not off the
hook yet. In its version of the budget bill, the House has included
a “methane fee” (i.e., a tax) that targets the natural gas we use to
heat and electrify our homes. Bear in mind that besides natural gas,
roughly 1 in 8 homes across Iowa use propane for heating, almost
three times the national average.
But the hit wouldn’t stop
there. Conventional natural gas and propane are key to Iowa’s
industrial and agricultural sectors. Raise the price of these
commodities or make them scarcer because of higher taxes, and just
about every worker and farmer in the state will feel the impact.
In August, Democratic Rep. Cindy Axne cast a procedural vote that
could soon lead to floor action on the $3.5 trillion spending bill
as well as the $1.2 trillion infrastructure package. Iowans are
right to be concerned with Washington’s lack of fiscal restraint.

Rep. Axne and her fellow Democrats should learn from Gov. Kim
Reynolds, who not only has a 53% approval rating, but also is
governing as a fiscal conservative. Going into the 2022 legislative
session Iowa’s budget will have a $1.24 billion surplus and Gov.
Reynolds has made tax reform a priority. Governor Reynolds
understands that economic growth cannot be achieved through
tax-and-spend policies.
Rep. Axne should be concerned that a multi-trillion-dollar federal
spending hike, backed by punitive taxes and more borrowing, could
tip Iowa – and the nation – into a new case of the economic doldrums
we thought we had recently left behind.
Pete Sepp is President of the
National Taxpayers Union and John Hendrickson is Policy Director for
Tax Education Foundation of Iowa. |